By enabling the transaction to occur through payment channels rather than on-chain, the lightning network offers a potential way for bitcoin to address its scalability problem. People have likened this to what fiat currency did for gold, arguing that the lightning network could be bitcoin’s ‘killer application’. The analogy works when you think about it,… Continue reading Lightning Network – Bitcoin`s killer Application?
Author: admin
Illustrating Lightning By Example
We can illustrate the Lightning Network through a simple example. Bob wants to buy a coffee from a cafe. Bob opens a payment channel with the Cafe and deposits some BTC to create a balance sheet between them. When Bob buys a coffee the Cafe issues an Invoice via QR code which Bob pay through… Continue reading Illustrating Lightning By Example
Lightning Network: Channels and Invoices
The Lightning Network is an example of Layer 2 bitcoin service. It is an off-chain approach first formally proposed in a paper by Joseph Poon and Thaddeus Dryja in 2015. The technology uses micropayment channels to scale the bitcoin blockchain’s capability by processing transactions more efficiently. Micropayment channels are opened between two parties looking to conduct a… Continue reading Lightning Network: Channels and Invoices
Separating the Layers
The idea of Layer 2 is to build protocols or secondary infrastructure (e.g. the Lightning Network) that can interact with a fundamental base blockchain (Layer 1 e.g Bitcoin) but not be restricted by its scale limitations. This is where we make a clear distinction between on-chain (Layer 1) and off-chain (Layer 2). Transactions described as… Continue reading Separating the Layers
Building on top of Bitcoin
Learn Crypto tries as much as possible to explain concepts in simple language, but reading the headline of this article, you might feel that we’re failing in our mission. If you’ve followed this section on the Basics of Crypto sequentially you’ll know that Bitcoin is a new form of internet money which is digitally scarce.… Continue reading Building on top of Bitcoin
What you`ll learn:
What you’ll learn: Revisiting the Blockchain Trilemma Understanding the crypto ecosystem in terms of layers What problem the Lightning Network solves The future of the Lightning Network
Bitcoin maximalism and going beyond Bitcoin
And thus we go back to human tribalism. It’s in human nature to form groups, to take sides, and to fight with other groups. We see this on all kinds of scale: from family feuds, to football teams, to rival countries – and cryptocurrencies are no different. So it’s not surprising that one of these… Continue reading Bitcoin maximalism and going beyond Bitcoin
Altcoins and notable Bitcoin forks
While these splits have been widely criticised by purists – known in the crypto community as Bitcoin maximalists, as we’ll see below – forking lies in the very nature of Bitcoin. And so, starting in 2011, new cryptocurrencies began popping up. Initially, projects began by forking Bitcoin’s codebase (but without necessarily splitting the existing network),… Continue reading Altcoins and notable Bitcoin forks
Scenario 1, 2 and 3:
Scenario 1: Planned improvement with full agreement The entire community is on board with the changes and updates their software. If this happens, the fork isn’t really a fork, as the entire network follows the same path. The old network dies out; end of story. This scenario is likely to play out when the change… Continue reading Scenario 1, 2 and 3:
Soft forks vs Hard forks
Not all changes in code require a fork, while changes in fundamental rules will inevitably lead to one. There are two types of forks: soft forks and hard forks. What is a soft fork? A Soft Fork is a code change that doesn’t break the rules of the old version – meaning both the older… Continue reading Soft forks vs Hard forks