Over the past few years, we’ve seen Bitcoin (BTC) and other digital currencies make headlines and gain the attention of investors, traders, and businesses worldwide. Among the many reasons behind this growing popularity is the new opportunities they offer—one of which is making financial services more accessible to everyone, even those in the remotest parts of the world.
But apart from this, many people use Bitcoin for its convenience. You can pay for your bills, groceries, and other purchases using BTC nearly instantly with just a few clicks on your phone. This is made possible by a technology called the Lightning Network. So what is the Bitcoin Lightning Network and how does it work? More importantly, who’s eligible to take advantage of this powerful innovation?
What is the Bitcoin Lightning Network?
The Lightning Network, also called the Bitcoin Lightning Network, is a second layer to Bitcoin’s blockchain designed to speed up processing times and reduce the energy cost of BTC transactions.
In Bitcoin’s blockchain, every transaction is permanently recorded in the network and the average confirmation time for payments takes up to 10 minutes. This depends on the overall network activity, transaction fees, and hash rate or the measure of computational power used when mining.
With the Lightning Network, Bitcoin transactions are a lot faster and more convenient. This is because the transactions aren’t necessarily broadcasted to the entire BTC network. This means that no miners need to be rewarded and you’ll only pay little to no transaction fees.
How does it work?
To help you better picture how it works, you can think of the Lightning Network as side streets and the Bitcoin network as a highway or main road. Generally, all BTC transactions pass through the main road where they are permanently recorded and confirmed by miners. Bitcoin processes an average of seven transactions per second and this waiting time gradually builds up into traffic, hence the estimated 10-minute confirmation time.
The Lightning Network is designed to decongest traffic in the highway or Bitcoin network through user-generated micropayment channels, making it ideal for small transactions. Because of the reroutes or side streets provided by the Lightning Network, transactions can be completed instantly with much lower fees.
Where can you use the Lightning Network?
Apart from facilitating speedy transactions, the Lightning Network allows you to efficiently complete and manage payments through QR codes and addresses on Lightning Network-enabled wallets.
If you’re wondering where you can use this lightning-fast invention, we created a list to help you get started:
- Vending machines – Remember what we said earlier about micropayments? You can pay in BTC quickly and more seamlessly in Lightning Network-enabled vending machines. All it takes is a scan and your payment will be complete in a matter of seconds!
- Online and in-store payments – Nowadays, many stores integrate the Lightning Network for their payment options. This means you can shop for your favorite clothes, shoes, and accessories and pay in Bitcoin quickly and effortlessly. Some stores even accept BTC payments for groceries online and have them delivered to your doorstep.
- Bill payments – Apart from paying for goods and services, the Lightning Network can also be integrated into bills payments. Imagine settling your account balance with just a few taps on your phone. This means you can skip waiting in long lines in banks and other payment centers.
- Public transportation – This is probably the most ideal way to use the Lightning Network. Since BTC transactions through Lightning can be made in just a few seconds—if not instantly—you can pay for your transportation ticket with just a quick scan.
- Giving tips in crypto – Bitcoin donations can also be made faster using the Lightning Network integration since these are micropayments. If you’re looking to make quick BTC transfers for charity works, look for non-profit organizations that accept crypto donations through the Lightning Network.
Who can use the Bitcoin Lightning Network?
If you’re going to think of it, the Lightning Network can be used nearly anywhere that accepts Bitcoin as payment. Simply put, anyone in the world can use it to process cheaper, faster, and more convenient Bitcoin transactions.
The Bitcoin Lightning Network is more popularly used in buying and selling cryptocurrencies. Its notable features allow many traders and investors in trading Bitcoin easily. Paxful, the leading peer-to-peer marketplace for Bitcoin trading, for example, allows its users to make quicker and cheaper Bitcoin transfers by integrating the Lightning Network into its system. Now, millions of Paxful users can send and receive small amounts of BTC instantly using their Paxful Wallet.
If you haven’t kickstarted your crypto adventure yet, Paxful also allows you to get a Bitcoin Wallet for free, so you can get started right away. All you have to do is create an account and verify it to unlock exclusive platform benefits. You also have nearly 400 ways to send and receive Bitcoin, including the most popular payment options in your country.
Ready for lightning-fast Bitcoin transactions?
We’re slowly transitioning to the digital world and many improvements in the financial world are still taking place. The emergence of Bitcoin and thousands of other cryptocurrencies is one. Still, the development of faster and cheaper transactions through the Lightning Network takes our financial experience to a whole new level. Have you tried lightning-fast payments in your Bitcoin transactions? Explore the opportunities you can get out of it and share with us your experience down in the comments!
*The content of this article is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
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