Lightning Network (“LN” for short) is a recently-proposed, and even more recently implemented, low-latency off-chain micropayment system that can work with Bitcoin or other similar cryptocurrencies, such as Decred. Since LN makes liberal use of smart contracts, the details of how it works are, unsurprisingly, complex. To make LN more tangible from a non-technical perspective, we will view it through the lens of practical engineering considerations and the concepts that drive those considerations.
The utility of LN is driven by several major considerations in the context of cryptocurrencies:
- low-latency payments - Many potential use cases for a modern system of transmitting value require a low latency, e.g. point-of-sale purchases. …