What is the Lightning Network? (Explained Simply)

While Bitcoin offers a solution to many of the problems presented by our current money system, it still has some drawbacks. One of its biggest limitations concerns the speed and price of transactions, especially during busy times. These limitations prevent it from becoming a true medium of exchange for day to day microtransactions, such as cash or credit card.

The lightning network was designed to solve just that. Built as a second layer over the bitcoin network, it enables people to transfer Bitcoin between one another instantly and without any fees. This is made possible by creating payment channels between two users. Payments can also be made between users that are connected indirectly, via network channels.

That's the lightning network in a nutshell. For a detailed explanation watch the complete video, here's what I'll cover:

0:40 - Bitcoin's scalability issue
1:48 - What is the lightning network?
2:20 - How does the lightning network work?
3:04 - Lightning network example
5:06 - Payment hubs
5:55 - Lightning network implications
6:10 - Conclusion

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See anything we haven't covered? Leave us a comment in the comment section below

[Bitcoins]

CAUTION!! Many scammers are using the comment section to promote their scams and sometimes even use the name “99Bitcoins” in their profile. Never send money to someone you don’t know and don’t accept offers to trade or exchange cryptocurrency from strangers.
Stay safe 🙏🏻🙏🏻🙏🏻

[ash-tube]

I’m just hearing about lightning network today. While this guy is covering the topic two years ago. Must follow channel

[pierremichelestival]

And here we are, three years later with Twitter implementing this technology to allow Bitcoin payments. Complex and fascinating at the same time. Bitcoin, NFTs, deepfake, etc. The world will never be the same.

[katmarcoux]

The best explanation I've heard yet! Thank you!

[maartenarnou]

I love the bloopers at the end!
And also, a great explanation. Thanks!

[rjmiller]

A visa and Bitcoin transaction are both near instant, it’s the confirmation that takes time. A VISA transaction takes weeks to confirm. Bitcoin takes about 10 minutes.

Every month business owners have to cover all the credit card payments that didn’t confirm and were reversed.

[TonyOlsenFerris]

This was very informative! Thank you! I look forward to an update on the lightning network in the future. :-)

[bluzta]

i would like to say that you are incredible ...you make it so good and easy to understand what a talent ..learning about crypto has been a stretch ..who to listen to ...i m glad i found you ..your the real deal ...thank you

[chacetheengineer]

It seems like between the rising difficulty and transactions moving off chain, the miners have dismissing incentive to mine.

[georgemavimbela]

u are the best in Explaining these Concepts

[tommyboy]

Thank u for the explanation. Very helpful!

[millanferende]

This is a great solution... as it shows you can create other Block-Chain systems, on TOP of the BitCoin system, BitCoin then acts as a FOUNDATION for other systems. If this is the case, then utilization can truly be limitless...

[frankfromupstateny]

This is my start to understand more hours of study....I'll be a "beginner"....thx.

[johanfick]

Love your videos Nate!! Excellent explanations.

[Ubeogesh]

4:35 Didn't understand the fraud prevention part at all. What exactly causes the stake go to your partner? What do you mean by "backing out now"?

[thomasowen]

This will never work. You very very rarely buy and sell to the same person. Also what happens if you want to close the transaction but the fee is more than the amount of bitcoin in the payment channel.

[johnnybravo]

Thank for continuing to make these awesome informative videos… Im going to be honest; the more I see info on bitcoin the more concerned am I about the long term success of it lol which just makes me wonder what the true and probably not invented cryptocurrency will take over fiat money.

[jairunet]

Excellent Ned, I really appreciate this information, very simple and to the point. Until then next one.

[chapmansbg]

You can't choose faster or slower transactions with BTC you pay whatever the rate is at the time of transaction, not like ETH where you can choose to pay more or less depending on how fast you want your TX to go through. Correct me if I am wrong,

[jancarsonweatherby]

5:50: "It doesn't matter if that channel goes through a hundred intermediaries" -- am I the only person who thinks this is a HORRIBLE IDEA? "Hey Bob, can you help me pay my Comcast Bill?" THAT'S NEVER GOING TO HAPPEN. "Hey Sue, will you take time out of your incredibly busy schedule to transfer these funds from my Wallet to Starbucks to pay for my Latte?" "WTF? Pay it yourself!" Seriously, HOW IS THIS A GOOD IDEA? Scalability is one thing - but it all comes down to EASE OF USE!