It is second layer technology that is used for making micro payments of cryptocurrencies. It offer features like scalability, instant payments, cross chain functionality and low cost to its block chain’s proficiency to conduct transactions. The lightning network decongest bitcoin and lessen related transaction fee for taking transactions away from main block-chain. It operate instant transactions and ominously improve block-chain functionality as a medium for daily use.
The lightning network is also used to operate off chain cryptocurrencies transactions involving the exchanges between the cryptocurrencies. It empower the one cryptocurrency to be replaced for another one without the connection of cryptocurrency exchanges. The lightning network was first introduced by Thaddeus Dryja and Joseph Poon in 2016. It is comparatively promising technology, that is still under development. Several problems associated with it have been solved but still here are some of them.
One of main problem of lightning network is to be decentralized, which does not requires any intermediary to conduct transactions, but in current model, the financial institutions and banks are core mediators through which all transactions take place. The second major problem associated with lightning network is rise in transaction fee of cryptocurrencies. The system may become redundant due to rise in transaction fee, since it would become inexpensive to perform bitcoin’s transaction. The third major problem is its security feature. Lightning network is supposed to be susceptible to theft and hacks because it is obligatory to be online at all times.