Topic: Difference between Lighting Network and Bitcoin (Read 593 times)

 

That seems more a definition than an explanation of how the network works. But yeah, you're absolutely right. However, trying to explain how it works in a few lines, I think it's practically impossible! I mean, in a way the common mortal can understand!
There is someone in the Lightning Network Experience thread trying to learn the basics of LN without doing pretty much any research. That's the feeling I have! He's hoping to understand how it works simply by people spoon-feeding all info! And I think I'm going to give up explaining too much more if I feel he's not making any effort on his own!

Neither is the lightning fee. It is based on the amount you're moving. If you try to move something like 0.01 BTC via lightning, it'll be way more than the on-chain equivalent.

I think I can do it in one sentence too, in laymen terms: lightning is a second layer solution which takes advantage of the Scripting language of Bitcoin and makes it possible to trustlessly transact off-chain as long as the peers (or their intermediary partners) share a funded multi-sig address.

Lightning network is faster because only the opening and closing transactions happen on-chain, every other transaction is off-chain and doesn't have to go through the normal BTC transaction confirmation process. Take note also that BTC transaction fee isn't fixed, it depends on the size of your tx and the BTC network congestion as of the time of broadcasting your tx.
LN cannot change the way BTC is used, it is a Layer 2 solution only, and surely most transactions will happen on the main blockchain.

The Bitcoin is a primary crypto currency that operates on decentralized block chain, whereas ,Lightning net work serves as an effective  layer-2 scaling solution of Bitcoin to increase speed of and reduce the transaction fee. It has been designed to address of Bitcoin's scalability limitations issue , thereby improving overall efficiency of the network. The main goal of lightning network is to increase network scalability and increase its usability.

That's exactly why I gave him some basic topics where he could start reading. And then, for sure he will find peripheral information that will complement that one and will give him a pretty good start!
Trying to explain LN in just a few lines, I'm not sure it is possible, because in the way, you start to feel the need to include one more subject, and then, another, and one more, because you simply have to... And when you notice, you have a book written! :p

I think there is nothing wrong with this type of question, it's not spoon-feeding at all because there are a lot of misleading information about Lighting Network and it's hard for a newbie to understand what's true and what's false, especially when search engines don't work the way they should.

By the way, I want to give you all a good description of what Lighting Network is in real life:
Imagine, you are a western union and own office in two countries, in France and England. England and France have 100K-100K Euro. A customer comes in Western Union office, in England and pays me 20K to send it in France. What England does is that England knows that French office has 100K in reserves and ask France to take 20K from its pocket and give it to French customer. Now, England has 80K, France has 120K (actually, England has 120K and France has 80K but this is because they change numbers online and use their own cash reserves till the end of the year). Now, imagine that French customer sends 10K, then 30K and then 20K, then English customer sends 20K and 50K back. Now, in numbers, France has 130K and England has 70K but actually, England has 130K in cash and France has 70K. Now, the year ends and they have to correct the Balance. So, England collects 30K Euro, England hires a helicopter and sends it to France. They finalized everything and both of them paid fees that it takes to transfer money from England to France via helicopter, before that, they were just changing numbers and paying zero fees. Now, France actually has 130K in cash and England actually had to give away 30K.

I hope this explanation isn't very confusing.

If I go to an interview and the interviewer describes the above for me and asks me to identify what he was saying. I will confidently tell him that he was describing the Lightening Network. Or atleast the idea that birthed LN.

Several years ago, shortly after hearing about Bitcoin for the first time and before I knew about this forum, I read an article which represented the blockchain like a wheel, and stated that it was being developed a second, smaller wheel, that would be able to interact with the first one and make little changes in a way that mistakes made during the process wouldn't pose a risk for the blockchain.

Was this the early representation of a layer 2 solution and/or has it something to do with modern LN? Or was it related to something totally different like forks? Sorry if the question doesn't make much sense, but I would like to learn.

I think the best way to describe it, is to say that Bitcoin is layer 1 and the Lightning Network (LN) is a layer 2 solution that are built on top of it.

There were some times when the Blockchain were very congested and transaction confirmation were very slow and expensive, so developers created a layer 2 solution that handles that. You now have a off-chain layer 2 solution that are better suited to a use case where you can use Bitcoin as a currency, with faster and cheaper micro transactions. 

This is over simplified to get you to understand the reason for the creation of the Lightning Network. 

Of course they are completely different, because the Bitcoin lightning network is a second -layer to the Bitcoin Blockchain. Also, this lightning network is faster compared to Bitcoin, and also cheaper compared to fixed cost bitcoin.

       And in the lightning network the process is fast while in Bitcoin it is not, but it will take a few minutes before the confirmation when it comes to the matter of Speed. Although the lightning network is currently still under development, it has the potential to change the way bitcoin is used.

** https://cointelegraph.com/learn/what-is-the-lightning-network-in-bitcoin-and-how-does-it-work

Since big exchanges adopted SegWit and Roger Ver and Jihan Wu et al. stopped dicking around with spam attacks, the blocks have been rolling pretty lightly, so there's no real demand for LN usage at all. Who would bother unless you are doing some super niche usage case where you require tiny transactions back and forth when you can just settle onchain for tiny fees. I suspect there will be no real 2nd layer demands until western nations start banning physical cash and people are forced to use Bitcoin to keep any chances of having financial privacy. Then maybe blocks become legit full and there's a transition into LN organically.

Thats what I already said that  o_e_l_e_o 2 replies here can be regarded as short and brief explanation of Bitcoin LN. That's the biggest advantage of being here, you get correct information from authentic people.

Everything that goes between opening and closing of channel's is managed by Smart Contracts.

The transactions are stored by both parties involved in the channel. Lightning software does this automatically.

They are just as immutable as any other bitcoin transaction. Lightning channels are a 2-of-2 multi-sig, so both parties must sign every transaction, and neither party can edit or modify the transaction without invalidating it completely. The risk is not in one party being able to change one of the transactions - as I said, this is impossible. The risk is with one party attempting to broadcast an old outdated transaction which favors them more than the most recent transaction. But as I mentioned above, if one party tried to do this, the other party can take all their coins as punishment.

Great explanation here!
I thought about the question but it seems I bug you much with questions but I have no option because this is where the most accurate answers are gotten.
You will be surprised how some persons who doesn't know anything about bitcoin will confidently explain rubbish outside this forum.

Apart from the said additional complex systems built on LN to encourage honesty, how is the immutability and permanency of the transactions in LN ensured.
In clear words, where are the transactions that happens between opening and closing channels stored and how immutable is it?

It is fully functional. Many of us have been using it for several years now but that doesn't mean it isn't still in an early stage of development with plenty of room to grow.

Plus it is responsible for securing millions of dollars worth of value; such things should not be rushed. Centralized shitcoins regularly have critical bugs which result in huge losses - bitcoin is different.

Block size in bitcoin has already been increased from 1 MB to 4 MB. There are very good reasons to not just endlessly increase block size, but if large blocks is what you want then there are a selection of shitcoin forks you can choose from. The fact that every one of them is constantly losing more and more value against bitcoin should tell you something though.

Well or we can just change how Bitcoin works from the beginning. Nobody says that bitcoin can only have one block every ten minutes and nobody says that bitcoin will forever to it’s block size. Satoshi even talked about changing the block size in the future if necessary.
The whole point is that bitcoin is way more successful than what people would have thought when all those limits were implemented. Lightning does simply solve what the core developers do not want to do at this point. As soon as Bitcoin gets the correct update all the lightning development will be for nothing.

It's been there for quite a while now. Don't know how much more time the developers need to get it fully functional.


Apart from bitcoin there is no decentralized cryptocurrency. Even ethereum recent shift from PoW to PoS confirms the fact that its in the hands of few developers. For pure decentralization bitcoin is the only option.


There is blockchain trilemma between decentralization, security and scalability. Bitcoin made a compromise on scalability but not on decentralization and security. While others are not making compromise on scalability but on decentralization.

Not entirely. It solves scalability issues at the current number of users, but to scale it up to global adoption needs other technology which is built on top of Lightning, such as channel factories.

I don't think so. Rather, it is still in early stages of development.

As BlackHatCoiner points out above, a faster initial confirmation is not necessarily better. Take a look at this site: https://howmanyconfs.com/. Take a look at BCash for example. You might think the big blocks are better since everyone can get in the next block. But actually, the blocks are almost empty (a few dozen transactions each, compared to 4,000 transaction per block for bitcoin's smaller blocks) because no one is actually using it, bigger blocks make the system more centralized, and it takes over 12 days to reach the same amount of security as bitcoin reaches in an hour.

It is trivial to launch a coin with instant transactions. All you need is a centralized spreadsheet which can update balances instantly. That doesn't make it a good coin.

No, the reason lightning hasn't taken off, is that first of all Bitcoin as currency hasn't taken off (while recognized as superior money), and also the cost and security risks of managing a lightning node. To backup your cash in Bitcoin, you just have to keep a seed phrase in paper. To back up a lightning channel, you need to use digital space, which is prone to error. Let alone you need to run a computer 24/7.

No, there are thousands of shit-tokens which have either zero volume which makes their transaction cost minimum, or have enormous block size limits, which makes their whole system fundamentally inferior and prone to centralization.

If we combine your last two replies here about Lightning Network then they are very short and informative explanation about Lightning network.

LN solves Bitcoin scalability issues but the reason why LN failed to take off (which I infer from your last explanation) is since most of the transactions are managed by LN not by the bitcoin network. Bitcoin network has developed its trust over a period of time and there is no other network that is widely trusted by so many people globally.

If solving scalability issue alone can take you to moon then there are thousands of tokens that are super fast when compared to Bitcoin.

Excellent explanation of LN. I think there is no better way to understand LN then reading this short but informative explanation.

There is question I wanna ask. Since the opening and closing of channels are the only thing going over bitcoin blockchain. Who is responsible for the integrity of intermediate transactions that are going on once channel is open and before its closed? LN do it on its own or in consultation with bitcoin blockchain since the final transactions will be going to Bitcoin blockchain once channel is closed.

Summary is a wrongly used word. The closing channel I meant.

That's a great read and a simple way to explain difficult ideas...

Since I've been tagged, I'll share an analogy I like for explaining the basis behind Lightning in really simple terms below.

Let's say you and I both run our own businesses. Sometimes I buy stuff from you, and sometimes you buy stuff from me. We get fed up of sending money back and forth between our bank accounts (i.e. standard bitcoin transactions), as it is time consuming and the bank charges us a fee every time. So, next time I come to see you to drop off some goods, we get out a jar and both put $100 in it. (Think of this as opening a Lightning channel.) I drop off the goods, and we agree you owe me $20, so we both record that when we open the jar, I get $120 and you get $80. The next day, I need to buy some stuff from you which costs $50, so now we agree that when we open the jar, the split will be $70 to me and $130 to you. This can go on and on for weeks, months, even years, with us both agreeing a new way to split the money, but without actually opening the jar. Changing the balance like this is instant and free. The banks (i.e. the bitcoin network) have no idea this is happening - all they know is that we both took out $100 to put in the jar in the first place. They don't know how we are agreeing to split that money, or how that split is changing.

Next week, I need to buy $20 of stuff from another business down the road. I don't have a jar with them, but you do. So we deduct $20 from my balance in the jar between me and you, and then you give $20 to this other business in the jar that you have with them. You essentially route my $20 to this other business without me having to set up a jar with them, all instantly and for free.

At some point we decide to open our jar (i.e. we close our Lightning channel). At that point we both take out whatever amount of money our final agreement was and deposit it back to our bank account. Only then do we need to make a transaction with a bank (a transaction on the bitcoin network), and only then does the bank/bitcoin network become aware of the final split of funds.

There's no need to worry about the difference between the Bitcoin blockchain and the Lightning network. The lightning network is just a second layer introduced as an alternative to complement the BTC blockchain and to provide seamless transaction confirmation for BTC whenever there's network congestion or a hike in the price of BTC transactions.
Some BTC users take advantage of it whenever they want to spend less on the tx fees and needed fast tx confirmation.

What did you mean by summary transaction? If you are referring to closing a channel, that's fine. As I and others have told earlier, when we close a channel, there will be an on-chain transaction. But all the other transactions happening between opening and closing a channel won't have any record in the Bitcoin blockchain. Imagine, you have opened a channel with 1 mBTC and spent 0.5 mBTC, you also received 0.2 mBTC. At this point, you want to close the channel. Your settled amount will be 1-0.5+0.2 = 0.7 mBTC. You will get this 0.7 mBTC on your Bitcoin wallet when a channel is closed and only this transaction will have a record on the Bitcoin blockchain.

I have read through the answers given so far, they are correct and true but some of the answers are not foundational and not basic. When you explain things to beginners, you try and use the beginners language even if you are an expert.
O_e_l_e_o is good at this and he has been helping me in the simplest method and language ever.

If you examine this question, you will understand that this question on its own is faulty, and trying to answer a faulty question will make the answers look non cogent even if they are.

First the OP, will have to understand that the correct question should be What is the difference between the Lightening Network and the Bitcoin Network.  And not the difference between LN and Bitcoin.
Bitcoin is a coin and LN is not. The comparison should be between the LN channel and the blockchain (or Bitcoin network).

So, OP the LN as others have said is a second layer of bitcoin network, which is introduced to fasten transaction and decongest the bitcoin network.
You and your friend can open  a Lightening Network channel, and the opening will be registered on the blockchain, every other transactions you do are off the blockchain until when you close the LN, and the summary transaction would be broadcasted in the bitcoin network. By this, you do not have to pay for the transaction fees which happened between you and your friend throughout the channel existed.

Wrong, none of transaction which happen on LN written on Bitcoin on-chain network. That would make LN useless since you lose some privacy and pay lots of fee to write all transaction which happen on your LN channel. When channel is closed, it actually create transaction which represent current state of channel (as in how much Bitcoin both party own).


And if you rarely make transaction, lower fee advantage of LN is diminished since you need 2 on-chain TX (to open and close LN channel) compared with 1 on-chain TX to make payment. There's also inconvenience of having multiple LN if your current Bitcoin wallet doesn't support LN.

Simply put, Bitcoin is a network that works by incentivizing people to secure it using objective means; namely, Proof-of-Work. The result is a digital system that grants electronic transactions that cannot be counterfeited.

Such system is very attractive to build onto. It's clearly resilient to human failure, as far as anyone can tell. It takes advantage of the human psychology, without including the flaws of human nature. Every person who owns part of it is encouraged to secure it, but no person who's against can do much.

Lightning is one network built on top. It tries to help on Bitcoin's scalability (as network), and it inspires for further creative and innovative ideas.

Lightning Network is an off-chain which means none of the transactions happening inside Lightning Network, isn't recorded on the Bitcoin blockchain. You can consider it with a custodial wallet transaction as well. When we use Binance for receiving Bitcoin from another party, we can use a Bitcoin address from Binance. After receiving Bitcoin, if we want to send Bitcoin to another Binance user, we don't need on-chain txs.
The same thing happened in LN too. When you open and fund a channel in LN, one transaction is recorded in Bitcoin Blockchain. After that, through LN, you may have thousands of txs but none of them are going to be recorded on the Bitcoin Blockchain ever, because the transactions aren't happening in Bitcoin Blockchain, they are happening in LN, another chain you can say. When you decide to close the channel, you will receive the fund you have in LN after all the transactions are settled and one transaction will be recorded in Bitcoin Blockchain. So, even if you are having a lot of txs in LN, only 2 transactions will be recorded in the blockchain. When you fund the channel and when you close the channel.

It's because LN transactions aren't yet comfortable for a lot of people. Though it's easier than a lot of people think, it's still not the same functional as Send and Receive. More development on LN-based wallet is needed I think which will make it easier to use without having a lot of knowledge on how LN works.

As already mentioned by ETFbitcoin, the Lightning Network is not part of the Bitcoin protocol or network. From my understanding, only the initiation and termination of LN channels are registered on the blockchain. This means micropayments within LN channels cannot be traced on the blockchain.

Yes that's why LN is created for. Bitcoin can handle 7 TPS only.


I would differ here. LN transactions may not be instantly written on bitcoin blockchain but after the channel is closed the transactions goes to on-chain (correct me if I am wrong).

LN has some WOW features to offer but somehow it failed to took off. People despite all odds still prefer to use bitcoin on-chain instead of LN.

Simple.

Bitcoin is a decentralized digital currency, while Lightning Network is a layer-2 scaling solution that enables faster and cheaper Bitcoin transactions.

I haven't used Lightening Network yet, but I have read about it. Saying that Lightening network operates on top of the bitcoin blockchain. Well, I know it operates differently but is it on top or below or parallel. My emphasis is on thr word "on top".

You compared it very bad.

You can not compare a coin with a non coin.
You can compare Bitcoin network with Lightning Network as two different layers (layer 1 - Bitcoin, and layer 2 - Lightning Network). The first and biggest difference is they are on different layers. Bitcoin transactions is on Bitcoin blockchain (layer 1). Lightning Network transactions is on layer 2 via Lightning Network channels.

https://en.wikipedia.org/wiki/Lightning_Network
https://en.wikipedia.org/wiki/Bitcoin
Lightning Network -- Basics (documents, data pages, files, plots)

Bitcoin and Lightning Network aren't the same thing. Bitcoin is the first and no-1 cryptocurrency of the world and it works on its own network named Bitcoin network. The lightning Network on the other hand is a layer 2 scaling solution that mainly works on top of Bitcoin to increase the transaction speeds, and reduce the transaction fees.

The transactions based on Lightning network aren't always recorded instantly on Bitcoin blockchain and have faster speeds than regular transactions. The Lightning network is the recommended choice for small transactions as the fees are low for those transactions.

Lightning network basically creates payment channels between two individuals, and that channel can be updated without being recorded on Bitcoin blockchain. Once the both parties agree with the transactions then they can close the channel and after closing the channel the transaction will be recorded on Bitcoin blockchain.

I think you're still at that point that you need to read for yourself about it. We cannot spoon-feed you all the info because it's not even humanly possible by simple dropping 14 years of information just like that.

What I think people can give you is directives, something like this:
1 - Learn what is Bitcoin
This will bring you knowledge about:
      - Bitcoin nodes
      - blockchain technology
      - wallets
      - public keys and private keys
      - addresses
      - transactions (onchain)
      - and much more. These are only a few very common terminologies you need to learn about.

2 - Learn about Lightning Network (different protocol / technology but operating on top of the Bitcoin network)
This will bring you knowledge about:
     - LN nodes
     - channels
     - wallets / apps / services
     - transactions (offchain)
     - channel balances and much more.

We have a dedicated LN thread here where there is a lot of information avialble. Check it here.

No.


Also no. Although since LN usually is used on top of Bitcoin network, few people might say Bitcoin give rise to LN.


Correct. LN isn't part of Bitcoin protocol/network and LN also works on different cryptocurrency (such as LTC and DOGE). If you don't mind long reading, Mastering LN Book show details comparison between LN and Bitcoin which can be read for free at https://github.com/lnbook/lnbook/blob/develop/03_how_ln_works.asciidoc#comparison-with-bitcoin.

Lightning Network and Bitcoin are two different technologies that serve different purposes.

As I understand it, the Lightning Network is a layer 2 protocol that operates on top of the Bitcoin blockchain. It is designed to address some of the scalability issues that Bitcoin faces by allowing for off-chain transactions. While Bitcoin transactions are publicly recorded on the blockchain, the Lightning Network transactions are not.

If you have bitcoin, you can make onchain transactions. Sometimes, the mempool can be congested and you will need high fee for making onchain transactions.

With lightning network, you can open a channel with another person, consisting of a multisig means of sending bitcoin offchain. You will fund your lighting network wallet which would be through an onchain transaction to open a channel. Once the transaction is confirmed, you and the other person can be able to make transaction using lightning network as the other person open the channel with you with. It is fast and of low fee. You can close the channel and move your coin back to your onchain wallet at anytime.

You can read this for it as a beginner:
A Beginner's guideline to Bitcoin Lightning Network
Electrum Lightning Network walkthrough

I'm worried to know the difference between Lighting Network and Bitcoin, when I saw the Lighting Network issues, I Don't know were to start to differentiate them.
Is Bitcoin a Lighting Network, or Lighting network give rise to Bitcoin transactions or these are two different technology, because this information of bitcoin and Lighting Network is understandable to people know the difference. Please I want to know the difference