The Lightning Network is a protocol for using Bitcoin in a smart and nonobvious way.
The Lightning Network is a protocol for using Bitcoin in a smart and non-obvious way.
Thus it is a second layer technology on top of Bitcoin.
It is changing the way people exchange value online and it's one of the most exciting advancements to happen to the Bitcoin network over the past few years. Right now, LN is in its infancy. In concept it's about 5 years old, in implementation about 3 years old. We're only beginning to see the opportunities LN provides including improved privacy, speed, and scale. With core knowledge of LN, you can help shape the future of the network while building opportunities for yourself as well. Some basic knowledge about Bitcoin is assumed but can be readily acquired by reading the first two chapters of _Mastering Bitcoin_ which are available for free online.
@ -12,7 +12,7 @@ While the bulk of this book is written for programmers, the first two chapters a
=== Motivation for the Lightning Network
As Bitcoin grows, and the demand for transactions grows, the number of transactions in each block will increase until eventually hitting the block size limit. When blocks are full, excess transactions are left to wait in a queue. Many users increase the fees they're willing to pay in order to buy space for their transaction in the next block. At the same time an increasing number of users are left behind. Their transactions, e.g. microtransactions such as common small spendings, are not economically qualified to be on the network. However, increasing block size simply shifts the problem to node operators, where each increase is multiplied by an order of magnitude.
As Bitcoin and the demand for transactions grows, the number of transactions in each block will increase until eventually hitting the block size limit. When blocks are full, excess transactions are left to wait in a queue. Many users increase the fees they're willing to pay in order to buy space for their transaction in the next block. At the same time, an increasing number of users are left behind. Their transactions, e.g. microtransactions such as common small spendings, are not economically qualified to be on the network. However, increasing block size simply shifts the problem to node operators, where each increase is multiplied by an order of magnitude.
Because blockchains are gossip protocols, each node is required to know and validate every single transaction that occurs on the network. Furthermore, once validated, each transaction and block must be propagated to the node's "neighbors", multiplying the bandwidth requirements. As such, the greater the block size, the greater the bandwidth, processing, and storage requirements for each individual nodes, effectively limiting the amount of scaling that can be done this way. Furthermore, scaling in this way has an undesirable side effect of centralizing the network by reducing the number of nodes and node operators. Since node operators are not compensated for running nodes, if nodes are very expensive to run, only a few well funded node operators will continue to run nodes.
@ -92,4 +92,4 @@ Wei is an entrepreneur who sells information services related to the Lightning N
=== Chapter Summary
In this chapter we looked at the history of the Lightning Network and the motivations behind second layer scaling solutions for Bitcoin and other blockchain based networks. We learned basic terminology including node, payment channel, on-chain transactions and off-chain payments. Finally, we met Alice, Bob, Saanvi, John, Gloria, Farel, and Wei who we'll be following throughout the rest of the book. In the next chapter we'll meet Alice and walk through her thought process as she selects a Lightning wallet and prepares to make her first LN payment, to buy a cup of coffee from Bob's Cafe.
In this chapter we looked at the history of the Lightning Network and the motivations behind second layer scaling solutions for Bitcoin and other blockchain based networks. We learned basic terminology including node, payment channel, on-chain transactions, and off-chain payments. Finally, we met Alice, Bob, Saanvi, John, Gloria, Farel, and Wei who we'll be following throughout the rest of the book. In the next chapter we'll meet Alice and walk through her thought process as she selects a Lightning wallet and prepares to make her first LN payment, to buy a cup of coffee from Bob's Cafe.
If all goes well, you will see no +ERROR+ message stopping the execution of the above command. The c-lightning software pakcage has been compiled from source and we are now ready to install the executable packages:
If all goes well, you will see no +ERROR+ message stopping the execution of the above command. The c-lightning software package has been compiled from source and we are now ready to install the executable packages:
Andreas M. Antonopoulos
5 years ago
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