Due to the increase in transactions on the blockchain at present, the network has gradually become slow, so many layer 2 expansion plans have been born to reduce the problem of soaring GAS fees and network congestion. The Lightning Network is a layer 2 payment product built on the Bitcoin blockchain, which can realize secure, private and near-instant transactions at very little or even free cost.
The design was first proposed in the paper “The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments” in February 2015 . Its main principle is to put a large number of transactions outside the Bitcoin blockchain, and only put key links on the chain for confirmation. Two concepts play a key role in the entire design: RSMC (Recoverable Sequence Maturity Contract) and HTLC (Hashed Timelock Contract). RSMC guarantees that direct transactions between two people can be completed off-chain, and HTLC guarantees that transfers between any two people can be completed through a “payment” channel. In this way, the transaction between any two people can be completed off-chain, and the final transaction result is confirmed on-chain through smart contracts.
How can any two people trade off-chain?
Usually, when we conduct transactions on the blockchain, we have to choose the GAS fee to the miners. The higher your bid, the priority confirmation of your transaction. If your bid has not been accepted by the miners, then your transaction will be queued to the back, and you may have to wait several hours or days. If the market changes too fast during this time, it will cause a certain loss. This is not an ideal blockchain transaction experience.
The Lightning Network is actually solving such a problem. It is also what we have repeatedly mentioned that a large number of transactions are placed outside the Bitcoin blockchain, and only key links are placed on the chain for confirmation. So how do you move transactions off-chain? There is another concept here called “payment channel”. Open a channel between us that can support transactions, that is, the “payment channel”, and record its opening on the blockchain. Users can conduct any number of transactions through this “payment channel”, and it can remain open in any time unit, such as hours, days, weeks, or decades. When the two parties in the transaction decide to close the channel, the blockchain will record and confirm the behavior. In this way, transactions that are prone to congestion can be completed off-chain, and only relevant data is recorded on the chain. Therefore, transactions will occur at lightning speed, and millions of transactions can occur, and small transactions can also be instantaneous. Make a deal without paying high transaction fees. Does this sound great?
State of Lightning Network
There are currently 25,097 nodes in the Lightning Network, an increase of 8.16% compared to the past 30 days. There are 65,877 trading channels, an increase of 13.6% compared to the past 30 days. The network capacity reached 2304.74 BTC , which is USD 103,131,725.18.
From a global perspective, the United States has the largest number of lightning nodes. It has 1276 nodes, accounting for 8.79%. There are 18,586 channels, accounting for 28.18%. Followed by Germany, Canada and Ireland.
The first 5 lightning nodes in the United States are: ACINQ (a Bitcoin technology company), bfx-lnd1 (belongs to bitfinex), bfx-lnd0 (belongs to bitfinex), OpenNode (bitcoin payment processor), SouthXchange (Argentina cryptocurrency exchange) ). The above data indicates that in addition to companies focusing on Bitcoin technology, the exchange is also actively working on the integration of Lightning Network nodes. The Lightning Network is also in full swing in the United States.
At present, China has deployed 26 nodes and 132 channels. Cities with a larger number of nodes are from Beijing, Shanghai, Hangzhou, and Hong Kong. Both the number of nodes and the number of channels lag behind the United States by a large margin.
When many nodes establish channels with each other, the Lightning Network will be formed. More and more transactions can be conducted on this network.
At present, different teams are developing a variety of lightning networks to make the lightning network more stable, safe, efficient, private and easy to use. In addition to technological breakthroughs, more users and node operators should be allowed to enter to increase the number of nodes and transaction channels. As on-chain fees and the value of virtual currencies, especially Bitcoin, increase, the Lightning Network will gradually become popular as a low-cost transaction method. The Lightning Network is currently undergoing a period of rapid growth, and I believe we will see more use cases and adoption.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-total-capacity-of-the-lightning-network-reaches-2304-74-btc-what-is-chinas-share/
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