Abstract

Lightning Network is an applicative solution to the scalability problem of the Bitcoin blockchain. As a second layer on top of the Bitcoin, Lightning Network can scale the Bitcoin transaction rate from 7 transactions per second to millions of transactions per second. There are already thousands of payment channels established inside the Lightning Network that enable cheap and fast small payments. These payments can have the size of one Satoshi, the smallest fraction of one BTC. In this paper, the benefits and challenges, as well as the proposed solutions to the issues in Lightning Network have been discussed. As analysis and current growth trends show, Lightning Network is a promising technology that has the potential to make Bitcoin the main digital currency over the internet.

Keywords: Lightning Network; Blockchain; Bitcoin; Cryptocurrency; Micro-payment; Scalability; Transaction Rate