How can it achieve 1 million transactions per second?

"How do we instantly transfer bitcoins via Lightning-Network?

How can it achieve 1 million transactions per second (Visa 65k)?

The diagram below shows how Lightning Network works for peer-to-peer instant payments.

▶️ With Bitcoin Networks

Step 0: Bob wants to transfer 1 BTC to Alice.

Steps 1 - 3: Bob signs the transaction and the transaction gets sent to the Bitcoin blockchain to package and confirm. Once the block is confirmed, Alice gets 1 BTC in her address.

▶️ With Lightning Networks

Step 0: Bob wants to transfer 1 BTC to Alice.

Step 1: Bob and Alice establish a channel, which is a wallet that must be signed by both Bob and Alice. Both parties can deposit BTC into the wallet.

Step 2: The deposit transaction is sent to the blockchain to package and confirm.

Step 3: Now the channel is opened, Bob and Alice can trade money. For example, Bob can send 0.01 BTC each time and send 100 times. These transactions are not sent to the blockchain.

Steps 4 and 5: After 1 BTC is transferred, the channel can be closed. This last transaction is sent to the blockchain. If there are any residuals in the wallet, it's returned to Bob and Alice's wallets.

💡 Lightning Network went live in 2018. It solves two major problems of the Bitcoin network:

🔹 Slowness (Bitcoin: 5 transactions per second, Lightning Network: 1 million per second)

🔹 Expensive transaction fee

Strike, the world's leading digital payment provider built on Lightning Network, announced $80 million fundraising in Sep 2022."

Author

AiUTOMATING PEOPLE, ABN ASIA was founded by people with deep roots in academia, with work experience in the US, Holland, Hungary, Japan, South Korea, Singapore, and Vietnam. ABN Asia is where academia and technology meet opportunity. With our cutting-edge solutions and competent software development services, we're helping businesses level up and take on the global scene. Our commitment: Faster. Better. More reliable. In most cases: Cheaper as well.

Feel free to reach out to us whenever you require IT services, digital consulting, off-the-shelf software solutions, or if you'd like to send us requests for proposals (RFPs). You can contact us at [email protected]. We're ready to assist you with all your technology needs.

© ABN ASIA