Foundations of Blockchain

The Lightning Network

The Lightning Network is a second-layer payment protocol that operates on top of the Bitcoin blockchain. At the time of writing, the implementation of this protocol is running in beta mode on Bitcoin's mainnet. It is a routed bidirectional network that was proposed to solve the Bitcoin transaction scalability problem.

Design

The Lightning Network creates a routed payment channel network where communication between the nodes is bidirectional. The design has been implemented by several open source communities by following a set of standards.

A simple design of the Lightning Network involves the following steps:

1. Create a payment channel by committing the channel with the initial funds from the parties

2. Perform micropayment ...