What is the lightning network? How will you help in the development of the blockchain?
Blockchains (blockchain) is an emerging technology that today tops the list of the most widely discussed and controversial technologies, as it is still from the perspective of some far-fetched to implement its concepts realistically, while some institutions have begun to implement them physically, and many believe that the huge potential that this technology carries will change working methods in many areas, Especially financial dealings. Individuals and companies have previously relied on intermediaries such as banks and governments to ensure confidence and certainty in financial transactions or anything of value, as intermediaries build confidence in transactions such as authentication and record keeping, and the need for intermediary’s increases when conducting digital transactions due to the ease in reproducing digital assets. Money, stocks, and intellectual property are essentially files, which are used in the bitcoin transactions. Here comes the chain block as a way to conduct digital transactions without any third party! When did blockchain technology begin to appear? What is this technique? How does it work?
What is blockchain technology?
Blockchain technology – which is the public financial record for financial operations in digital currency – suffers from a scalability problem.
The problem revolves around the network’s ability to deal efficiently with the increasing amount of financial operations, as this technology is only able to make seven transactions per second with a capacity of one megabyte, while a visa can conduct two thousand transactions per second. Bitcoin Banker play important role when connecting bank account with bitcoin.
To solve this problem, the scientists have come up with a modern technology to reduce the difficulties facing the block chain, and this is represented in the “lightning network” technology that contributed to developing the block chain and responding to the requirements of fierce competition in the crypto market. The transaction acquires a green light after confirmation of its correctness, and the storage comprises the amount and the digital signature of the seller and the purchaser.
A second layer of Bitcoin
Writer Shan Rae explains in his article published on the American “Hackernon” website, that the idea behind creating a lightning network is that small-scale daily transactions should not be stored on the network of major blocks chain dependent on bitcoin.
The writer mentioned that transactions outside the chain that use the lightning network contain only two entries, one of which is to open a special “payment channel” between the two parties, and the other to close them. The pay channel is a special method adopted by two users, which allows them to deal with each other outside the chain.
Example of the lightning network
As such, you now have a private off-chain channel to handle the cafeteria. Financial transactions can only be carried out from a “multi-signature account” only when the parties enter into an agreement to do so.
The private channel is closed through a financial transaction that distributes the funds of your own accounts on the main blockchain network.
Effects of the network In light of the presence of multiple parties. To further clarify this process, let us use the previous example, and suppose you have two separate channels open outside the chain: one between you and the cafeteria, and another between you and a co-worker.
And if your co-worker accompanies you for lunch, and instead of opening his own channel outside the chain, he can transfer the money to the cafeteria by using your “multi-signature” account as an intermediary between him and the cafeteria (while updating all appropriate balance sheet lists during the process).
Thanks to this technology, everyone in this network can buy goods from the cafeteria as long as they have a budget for their accounts. Consequently, the transaction can take place through the related payment channels.
The writer indicated that scalability is a major problem facing major public blockchain networks. In the face of competition from “EOS”, “Ketium”, “Ethereum” and other digital currencies, the lightning network is a viable solution to tackle the problem of the expansion of the formation of Takween through conducting a large number of transactions outside the chain, and thus, reducing the load on a chain Bitcoin-based major blocks.