Lightning Network Bitcoin Transactions

Lightning Network Explained - Revolutionizing Bitcoin Transactions


What Issues Does the Lightning Network Try to Address?

Bitcoin's main problem is slow transaction speeds and high costs. Transactions are grouped into blocks on the blockchain, but each block has limited space for transactions. If your transaction doesn't fit, it goes into a queue, which can take a long time to process, making quick transactions impractical, like buying a cup of coffee.

ฺBitcoin's main problem

Bitcoin's network relies on a proof-of-work consensus protocol, where miners use energy to solve mathematical puzzles, and they charge fees to cover their costs. As more people use Bitcoin, transaction fees increase because there's limited space in each block. This became evident in late 2017 when Bitcoin faced high usage, causing transaction fees to soar to $37 per transaction, making it uneconomical as a currency.

The Lightning Network was introduced to address these issues and make Bitcoin faster and cheaper for everyday transactions.

What is the Lightning Network?

It is a second layer for Bitcoin (BTC) that makes it even better. It uses special micropayment channels to improve the way transactions work, making them faster and cheaper. The Lightning Network is like a smart solution that solves some of the issues with Bitcoin by introducing off-chain transactions between two parties and allowing them to easily send or receive payments from each other.

Off-Chain Transactions.

The Lightning Network is a technological solution intended to resolve the challenge of sluggish transaction speed on the Bitcoin blockchain by implementing off-chain transactions.

The main Bitcoin blockchain can usually handle less than 10 transactions per second. In contrast, the Lightning Network has the potential to handle millions of transactions per second, making it much faster and more scalable.

Ingredients in the Lightning Network

The Lightning Network is made up of three important parts: lightning nodes, payment channels, and routing nodes.

How Does it Work?

The Lightning Network makes Bitcoin transactions faster and cheaper by bypassing the main Bitcoin blockchain.

Instead of having all transactions recorded on the main blockchain, the Lightning Network sets up a flexible network of direct connections between users called "channels." These channels can handle multiple payments without involving the main blockchain.

Multiple Payments

The network is run by regular people or companies who operate nodes, which are just programs running on their computers. This decentralized approach helps maintain the Lightning Network's efficiency and security.

To start using the Lightning Network, you need to lock up some Bitcoin in a payment channel. Then, you can use that Bitcoin within the Lightning Network until you decide to close the channel.

When you want to receive a payment, you need an address, which is a long string of characters (often in QR code form). The person who wants to pay you simply scans the QR code with their Lightning Wallet, confirms the payment and the transaction is sent across the network to you. This process happens incredibly quickly, usually within seconds, hence the name "Lightning."

QR Code to Receive BTC

Since Lightning Network payments don't go through the Bitcoin blockchain, they avoid the long wait times and high fees associated with traditional Bitcoin transactions. This means even tiny payments, as small as one hundred millionths of a Bitcoin (called a satoshi), can be easily made.

Once you're done using the Lightning Network, you can close your channel and return to using your Bitcoin on the standard Bitcoin network as usual.


In the current state, the Lightning Network has around 16,000 Lightning nodes and over 70,000 channels running as of July 2023. The total network capacity has reached 3,815 Bitcoin, which is approximately worth $113.2 million based on current values.

While the Lightning Network encounters various challenges, efforts are being made to develop a stronger ecosystem that focuses on robustness, scalability, and user-friendly experiences for the future.

Closing Thoughts

As always, we would love to hear your feedback! Please let us know your thoughts about our content, along with any suggestions for improvement through our Twitter account or Telegram channel.

Stay tuned for announcements of upcoming online events such as CryptoZombies Live Workshops and special guest online meetups.

Follow us on Twitter @CryptoZombiesHQ or signup to our mailing list or start a free course @

Open Chat Open Chat