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  • Writer's pictureSarah Dixon

3 Major Benefits Of The Lightning Network

A lightning network is just a solution that acts as the second layer of Bitcoin Blockchain technology. This network offers increased transaction time by decluttering network congestion. Experts opine that Bitcoin’s scalability problems will come to a standstill with the advent of the lightning network. It is set to provide off-chain transactions within the participating points, opening doors for liquidity and fast real-time settlements.

Now, people ask how does the Bitcoin lightning network work. The simple answer to this – the Blockchain has its own way of leveraging zero-proof trust and arbitration through the Lightning network that builds open channels between the users for small and cheap payments. These channels facilitate trading IOUs back and forth before settling accounts.

The lightning network is different than the primary Blockchain. It does not require the need for intermediaries that route all the conventional transactions today like the banks.

Here are some of the benefits you would love to know about the lightning network:

  • Offers scope for real-time settlements: Settling Bitcoin is now an easy affair. You can use the channels to send over a Bitcoin to the merchant; all can be done through a lightning network. Previously, converting fiat to Bitcoin and sending it to an account could take days before investors had to depend on a transfer wire system. Today, the system is super simple, all thanks to the lightning network. You can get liquidity within seconds. Bitcoin can be converted to fiat round the clock on a cross-border platform that’s entirely functional. The funds are replaceable along with that, the transactions are noted in the ledger with all details. These are essentially the proof of the money being sent. The benefit is there is no need for follow-ups. Delays and closures on bank holidays are no issue similarly. Smart contracts and multi-signature scripts form the lifeblood of the lightning network. This is to make sure that all the funds that are sent to a specific recipient through a channel reach the recipient and nobody else.

  • Less energy requirement: It uses a peer-to-peer network i.e., by using the existing network people are already using. The lightning network utilizes off-chain transactions. It doesn’t use the computational power required to transfer money over the blockchain. From a survey by Galaxy digital in 2021, it was estimated that the current banking system consumed annual energy of 263.72 TWh. Comparing this with Bitcoin’s energy usage upfront, it may seem high at face value and transactional value. However, contrary to that, the carbon emissions are lower than many daily activities. This has been possible due to the Lightning Network.

  • The transaction costs are low: With the lightning network, comes financial freedom and cost savings. Many small businesses (about 2 to 3%) lose their gross revenue to credit card fees while paying out to vendors, suppliers, and for utility. In fact, this network also aims at solving the mining issues that miners face. The lightning network offers you complete financial autonomy, which means you gather your funds on your own and act as a stand-alone bank. You are also entirely responsible for underwriting your transactions. So, considering the regulatory perspective, yes, the credibility of the network is still being scrutinized by large enterprises.


The lightning network has made things a lot easier, but at the same time, it is not devoid of hacking attacks because it is not like other card transaction networks. For instance, if someone gets access to your account and utilizes the funds to purchase goods or pay for services, you will not be able to trace the crime back to the perpetrator and get the funds using a technique called fraudulent channel close.

To use the lightning network wisely, you must be educated enough and know how to keep your credentials protected. It is your sole responsibility to help yourself, as transferring transactions over the lightning network can be massively risky for small businesses.

If you must use the lightning network, you must use some extra layers of security provided by the specialized companies such as the device authentication system that can stop hackers from getting access to somebody’s wallet or funds and then exhausting it at a merchant’s (participating one) location.

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Disclaimer: This is a paid release that was not written by Crypto Online News. The statements, views and opinions expressed in this column are solely those of the content provider and do not necessarily represent those of Crypto Online News. Crypto Online News does not guarantee the accuracy or timeliness of information available in such content. Do your research and invest at your own risk.

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