Layer 2 protocols are basically applications stacks built on top of the existing base layer. To put that into perspective, if Ethereum is layer 1, Cryptokitties is an application built on top of the base layer, becoming layer 2. Layer 2 applications range from menial applications to major upgrades on the base layer.
One such Layer 2 protocol that has been making news for at least 2 years now, is the infamous Lightning Network. Initially conceived as a solution to the scalability problem of bitcoin, Lightning Network or LN has since gained serious momentum and scope. LN now even supports cross-blockchain transactions, although the number of blockchains under LN is relatively low for now.
In essence, Lightning Network solves the scalability problem of Bitcoin by shifting transactions off-chain and increasing throughput, essentially becoming a sort of smart contract for the Bitcoin blockchain. Users of the Lightning network essentially stake their holdings in a contract off-chain and shift the ownership without going through the tedious process of propagating transactions on-chain. This also ensures that transactions stay private, for better or worse.
After several failed attempts, LN finally saw a glimmer of success in 2018 when the protocol was fully out of the beta stage and ready for large-scale use. Adoption of LN went through the roof, with entities such as Zebpay, Blockstream and Stellar discussing and implementing some form of LN. Jack Dorsey, the CEO of Twitter even tweeted his enthusiasm several times on the future of LN.
🔔Comment your thoughts on the future of the Lightning Network and what it means for the ecosystem.🔽🔽
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Hi @reverseacid,
It has been reported that the LN makes transactions almost instantaneous. That is extremely good news for bitcoin.
I also remember reading earlier that LN being off-chain does not provide the same security as bitcoin on-chain and is therefore suited for micro-payments and not for large transactions. Not sure whether that still stands.
Hi @reverseacid. I'm not quite sure how LN works but it seems to be a great deal to solve the scalability problem. Maybe this will be helpful to increase bitcoin's price.
I maybe asking a silly question here but will LN make more bitcoin available to the market or is it just to make transactions easier or faster.
I find the most frustration when buying bitcoin is the time it takes to reach my account.
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Hi @reverseacid
I am not that much technical but based on this post, I understand that Lighting network helps to strengthen exisiting payment system to work well with better success rate.. is my understanding correct?
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