Bitcoin’s Lightning Network protocol has had a lot of naysayers in the past, stating that it wouldn’t work or that it would never even be completed. With the test net version coming online a while ago now, the main net, despite having a lot of warnings about risks involved (as it’s still in the alpha stage, for all intents and purposes), has grown. And it’s grown by a LOT.

What is the Lightning Network?

The Lightning Network is an off-chain method of transacting using Bitcoin. It creates a sort of smart contract by opening “channels” to nodes that allow you to send data back and forth into the web as a whole. A great way to think of it is being like the Internet: there’s no central server or site, it’s just a web of computers all linked together that can bounce information around as needed. So let’s say that Aaron opens a channel to Bob, and I open a channel to Aaron. I can now instantly communicate with both Aaron and Bob, using Aaron as the hop to get there. As it continues to grow, the web becomes much more interconnected, with many more links going back and forth between different parties.

Essentially, the system is designed such that there’s still a provable way to send funds, and it’s secure, such that someone cannot just take your coins. Coins are added to the channels when they’re opened, and everything is settled when the channel is closed, pushing the resultant transaction to the Bitcoin blockchain.

The Cost of Using LN

The cost of using the Lightning Network is somewhat minimal compared to normal sends. Essentially, you just pay when you open and close the channel, and it’s a normal network fee. Bouncing funds around once they’re in the channel is pretty much free, with nodes choosing their own fee structure (so far, however, most transactions are in the range of 10 or less satoshi). The idea of paying two fees for the channel itself may be a bit confusing, but it’s easier to explain with a little scenario.

You have a wallet with 1 BTC in it and you want to spend it at a variety of different places. You are going to make a total of 100 transactions, each averaging 0.01 BTC. With the normal network, you have just paid 100*networkFee for this. If all of them were on the Lightning Network, however, you just pay 2*networkFee and then when you are paying each of them through the channel, it’s almost free. The more you have in the channel, the less you’re paying on-chain, and the easiest way to think about the channel is as being like a hot wallet.

The Speed: Supersonic

Bitcoin has always had an issue with speed of transactions, in that you can see them instantly but they still need to be confirmed. With the Lightning Network, this is an instant process because everyone can already tell that you have the funds allocated to the channel, so once you sign to have them sent, it’s a done deal. There’s no waiting an hour for it to finish (or more), and that’s huge!

Testing the Test Net

If you want to test out the LN test net, you can follow the guide here. There are more as well, but this should get you on your way. Do note that you aren’t actually spending BTC with this, as it’s just the test net (a testing currency and sites that accept it so you can see it in action). But it shows the concept, and you can then take it a step further and join the main net as well, though as of this writing, it is recommended to hold off on that unless you fully accept the risks. While there have only been a couple bugs found, it’s still considered as an extreme risk at this point. And to see its growth, you can check out this awesome chart. To put it into perspective, as of this writing, there are 429 nodes and 968 channels open, and it has been showing daily growth.

I’ll continue following the progress of the LN and will keep you updated! It’s not quite to the point of “so easy your grandmother can do it,” but there are multiple groups working on that as well.