Lightning Network

WHAT: The Lightning (LN) is a off-chain pay-as-you-go payment network on top of the Bitcoin network that creates source based onion routed payment (SORP) channels via its’ own lightening network nodes. It holds balances autonomously with the assistance of an LN enabled wallets- like a centralized funded exchange.

SORP nodes select pre-determined encrypted (onion) routes based on factors such as fees & capacity to make payment channel decisions. Since all routes are source based, no routes in between know the destination, except the destination.

WHY: LN is an attempt to preserve the 1MB block limit and solve the scalability debate by offering a user-friendly off-chain (layer 2) solution built on top of Bitcoin. Advocates believe that this solution will keep the Bitcoin network decentralized. Detractors believe it is largely unnecessary.

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