The lightning network is the second layer of Bitcoin which makes it even better. It employs special micropayment channels and ensures that transactions are cheaper and faster. This network has introduced off-chain transactions between two parties and makes the transactions easier and also solves some of the issues faced by Bitcoin.
Components of the lightning network
Lightning network is composed of three major parts and they are depicted below with a brief note.
- Lightning nodes: Lightning nodes are the machines and software that allow individuals and organizations to join and use the network.
- Payment channels: These are the paths between two nodes, which allows them to conduct transactions off the main blockchain.
- Routing nodes: These nodes find the best paths for payments to travel through. This ensures the transaction reaches the destinations smoothly and efficiently.
Benefits of Lightning network transactions
- Low transaction fees
Traditional Bitcoin transactions include high transaction fees, mainly during network congestion. But in lightning networks, the transaction fees are often negligible or otherwise no fees at all. So lightning network is best for frequent transactions.
- Lightning-fast transactions
Confirmation for the Bitcoin transaction can take longer time than expected. Fortunately, lightning network happens almost instantly. Transactions happen within seconds and provide an unparalleled user experience.
- Scalability
With the application of a lightning network, Bitcoin can handle a number of transactions per second, which lays the foundation for wider adoption without overloading the main blockchain.
- Reduced blockchain load
The lightning network reduces the overall load on the Bitcoin blockchain. This typically means more space for essential transactions and helps keep the network’s decentralization.
- Privacy
Lightning network offers more privacy compared to on-chain transactions. They offer confidentiality by ceasing the broadcasting of the details of every payment to the entire network.
- Micropayments
Lightning networks are facilitated with low fees and speed which makes the micropayments viable.
What is a lightning address?
Lightning address is the easiest way to make payments via the Lightning network. This address is similar to the email address, the format is also the same. A lightning address will be provided automatically to every user. The address can be viewed on the account screen. Users can also share their lightning addresses on their social media accounts.
Let’s see how to send payments to a lightning address
To initiate the process, the user needs to visit the Cash or Bitcoin screen and follow the below-given instructions.
Step 1: Click ‘Send’.
Step 2: Select @ username
Step 3: Enter the recipient’s address, you can also add a note to it (optional).
Step 4: Enter the amount you wish to send.
Step 5: Confirm the send.
Once the payment has been sent, the remaining process will be carried over by the lightning network and delivered to the recipient.
Now we are going to check out the process for receiving payments on the lightning network.
Any payments sent to the lightning address will be in the form of cash or Bitcoin. If you are receiving cash from a person you haven’t requested, you can set the receiving either in the form of cash or Bitcoin. Whatever the initial mode of payment, the receiver can decide and set the default receiving currency.
Follow these steps to change the default receive currency:
Step 1: Click on the Account icon.
Step 2: Choose Bitcoin.
Step 3: Click on the receive currency option.
Step 4: Choose ‘Cash’ or ‘Bitcoin’.
After this, you will be receiving the payments as per your default receiving currency.
It is important to note that, Bitcoin payments that are made less than 1 cent will always be received as Bitcoin. No worries, you can change the settings at any time from cash to Bitcoin.
Why would you choose a Crypto wallet for a lightning network?
Bitcoin lighting network is best for quick and efficient crypto payments. Of the number of digital wallets, crypto wallets are the exceptional ones. This digital wallet possesses a user-friendly interface which makes access easier. The wallet is completely compatible with newbies and experienced users. You can find crypto wallets on multiple platforms such as Android, iOS, and web browsers. This typically means the wallet can be accessed from anywhere at any time.
Conclusion
Lightning Network is the best solution for lightning-fast crypto payments, and it utilises digital wallets. Lightning network is a new trend in the field of cryptocurrency transactions. As the name implies, transactions happen at lightning speed, which will be helpful in everyday transactions. The low transaction fees are the highlight of this network. The network benefits can be maximized with the utilization of digital wallets which imparts an intuitive interface. Crypto wallet is a type of digital wallet used to harness the full potential of the Lightning network.