What is the Lightning Network?

@joelle 

The Lightning Network is a second-layer protocol built on top of a blockchain network, like Bitcoin, that aims to solve the scalability issue and increase the transaction speed of the network. It is designed to facilitate faster and cheaper transactions by allowing participants to create bi-directional payment channels off-chain, meaning transactions can occur without directly involving the blockchain.

By conducting transactions off-chain, the Lightning Network reduces the congestion on the blockchain, enabling instant transactions with extremely low fees. It operates using smart contracts that establish the rules and conditions for how funds can be transferred within the payment channels.

The Lightning Network allows users to make multiple transactions with different participants on the network, leveraging the network effect to potentially enable global scalability for blockchain-based transactions. It offers the potential to enhance the efficiency and usability of cryptocurrencies by enabling micropayments, while reducing the load on the blockchain and increasing its overall throughput.