What does Lightening Network mean?
The Lightening Network is a theoretical upgrade technology for the Bitcoin network that has been described in its whitepaper as “Scalable Off-Chain Instant Payments.” Basically it will allow for low-cost, high-speed and high-throughput payments to be made on the Bitcoin network. It has been in development for several years, and if developers are successful in creating the Lightening Network it could also be used in a wide range of other cryptocurrencies, not just Bitcoin.
The idea of the Lightening Network came about because one of the core issues with the Bitcoin network is its lack of scalability. Transactions currently average 7 seconds each, which is far too slow to enable Bitcoin to be used as a transactional currency. Consider that the Visa network can handle up to 45,000 transactions per second and you can see the need for improvement in Bitcoin’s network if it is ever to be taken seriously as a transactional currency.
Already, a fork has occurred which created Bitcoin Cash, and that blockchain is aiming to solve the scalability issue by increasing the amount of data a block contains from 1MB to 8MB. Even that would be slow compared to the theoretical speed of the Lightening Network though.
The Lightening Network plans on adding an additional layer of technology that will sit alongside the Bitcoin blockchain, and will consist of hashed time lock contracts, which allows for the same level of security currently inherent in Bitcoin. One sticking point with this plan is that the time locked contracts will themselves need to have Bitcoin locked in them to participate in the Lightening Network.
As of the first quarter of 2018 there are some elements of the Lightening Network that are coming into alpha and beta testing.