Lightning Network
The Lightning Network is a second-layer scaling solution built on the Bitcoin blockchain, aiming to enhance the transaction efficiency and reduce the transaction costs of the Bitcoin network. The specific introduction is as follows:
- Background of Generation
The Bitcoin network suffers from the problems of slow transaction speed (approximately 7 transactions per second globally) and high transaction fees. The effective confirmation time for each transfer takes about 1 hour, and when the network is congested, the handling fees increase due to the "bidding" mechanism. To address these issues, Bitcoin developers Joseph Poon and Thaddeus Dryja proposed the concept of the Lightning Network in 2015.
- Core Principles
The Lightning Network improves off-chain transaction channels through smart contracts, with core concepts being the Revocable Sequence Maturity Contract (RSMC) and the Hash Time-Locked Contract (HTLC).
RSMC solves the confirmation problem of off-chain transactions. It requires both transaction parties to pre-deposit funds into a "micropayment channel" first. After each transaction, they jointly confirm the fund allocation plan and sign to invalidate the old version. When cashing out, the final result is recorded on the blockchain network.
HTLC addresses the payment channel issue. Through time-limited transfers, it stipulates that the transferor first freezes a sum of money and provides a hash value. If someone can present a matching string within a certain time, the money will be transferred to the recipient, thereby enabling transfers among multiple parties and forming a virtual "payment channel".
- Operation Mode
Establishing a Two-Way Payment Channel: Users first create a two-way payment channel. For example, Alice and Bob each transfer a certain amount of Bitcoin to a multi-signature address jointly controlled by both. This process requires a transaction on the main chain to lock the funds.
Off-Chain Transactions: After the channel is opened, both parties can conduct any number of transfers off-chain without broadcasting them to the blockchain. Transactions are confirmed quickly and with almost zero fees. Both parties maintain their own records, and the cryptographic design ensures the authenticity and reliability of the records.
Closing the Channel: When transactions end, the channel can be closed by mutual signature of both parties, transferring the funds to their respective addresses. Unilateral forced closure is also possible, but the party doing so will be penalized by delayed refund.
Network Expansion: Numerous such two-way payment channels interconnect and expand into the Lightning Network, enabling fast transactions among more users.
- Main Features
High Efficiency: Transactions are completed within off-chain payment channels, requiring only the execution of smart contracts instead of confirmation by the entire network of nodes, significantly improving processing efficiency.
Support for Microtransactions: It lowers the transaction threshold, enhances the scalability and practicality of the Bitcoin network, and makes it more suitable as a daily payment tool.
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