When the digital currency Bitcoin was introduced in 2009, we were all excited about the high speed of transferring money from one part of the world to any other part through the Internet. With the help of Bitcoin, we were supposed to be able to make instant payments all over the world, but very soon everything changed.
As more people were drawn to Bitcoin, the time it took for a transaction to be confirmed increased accordingly. Thus, the transactions were slowed down and the transfer costs were high. There was even a time when the cost of a transaction reached 30 dollars. For this reason, Bitcoin was no longer suitable for small payments because in many cases the cost of the transfer fee was higher than the transfer amount itself.
As time passed and this problem became more apparent, Bitcoin developers came up with different ways to solve it. One of these solutions is the Lightning network, which we introduce in full in this article.
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What is scalability?
Before we go to the Lightning network, we must first familiarize ourselves with the concept of scalability. Simply put, “Scalability” means maintaining the normal performance of the network, as the number of users and the number of transactions increase.
As mentioned, Bitcoin transactions on its main network suffer from two severe problems. One is that the fees for these transactions are usually not cost-effective for transferring small amounts, and the second is that the time required to confirm transactions in the Bitcoin network is very long.
Now, by focusing on these problems, Lightning has made it possible to confirm faster and cheaper transactions. New blockchains have had to give up scalability in order to maintain decentralization. For example, the Bitcoin network is only able to confirm 7 transactions per second, which is a big problem for achieving global acceptance of this issue and has worried many investors and users.
In late 2017 and early 2018, this problem clearly manifested itself in the Bitcoin network with the increase in the time required to confirm transactions, as well as the astronomical growth of fees.