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Crypto overview

Lighting Network
Lighting Network (LN) is a payment protocol. It works in the so-called second layer (Layer 2) and is embedded at the top of the blockchain cryptovalute chain.

It enables quick transactions between participating nodes and has been announced as a solution to the Bitcoin scalability problem.
It is a peer-to-peer (P2P) micropayment system and functions through a network of two-way payment channels.

Using the Lighting Network network involves opening a payment channel by concluding financing transactions in the appropriate base chain (Layer 1) and then making any number of LN transactions (Layer 2), which update the initial distribution of the channel's financial resources without broadcasting them in the blockchain chain (Layer 1).
The payment channel is then closed by finalising the transaction for the distribution of funds in the main blockchain channel (Layer 1).

The Lightning Network requires the vulnerability to errors in the transactions of the main blockchain chain to be determined and the Segregated Witness (SegWit) system is used for this purpose.

The LN concept was presented in 2015 by Joseph Poon and Thaddeus Dryja. The beta version of the mainet network running on the bitcoin blockchain chain was launched on March 15, 2018. However, the official version fully implemented in blockchain has not been launched yet.

The project is being developed in Lighting Labs

Possible limitations of the Lightning Network are:
  • Unlike transactions made within the main Blokchain Bitcoin network, LN payments cannot be made if the recipient is not available (offline).
  • Network participants may have to regularly monitor their payment channels to ensure the security of their funds (this risk may be mitigated by the creation of channel monitoring services).
  • LN is not suitable for large payments. Since the network consists of many multi-sig portfolios (which are basically common portfolios), it is very likely that they will not have sufficient funds to act as intermediaries for large payments.
  • Opening and closing a payment channel involves execution of a transaction in the main blockchain network, which usually involves manual execution and generates high transaction fees.
[Image: lighting_network_01_coinlibrex.png]

[Image: lighting_network_02_coinlibrex.png]

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