After the previous article on what its lightning network, here are how bitcoin lightning network works, its benefits as well as weakness
In order to open a payment channel, both parties must set up multiple signature wallets and keep a certain amount of funds. Funds kept in multiple-signed wallets are accessible only when there are two parties’ private keys.
A multi-signed wallet is a kind of safe where transaction funds are stored. Through such a permanent payment channel, the two parties can execute off-chain transactions as much as they want.
Immediately after each transaction, the contractor signs and updates a copy of the balance sheet that records the number of coins each has. After completing the transaction, you can close the payment channel and send the final balance sheet to the Bitcoin blockchain.
Lightning Network Smart Explicit can check the final version of its balance sheet and confirm that the exchange happened.
The benefit and concerns of Lightning Network
The advantage of the Lightning network is that it makes small payments possible. Bitcoin networks will receive a minor fee when the transactions settled.
However, it stays open until the payment channel clears up, so there are no fees until liquidation. In other words, they have little or no commission. As a result, payment can be made up to the level of 1 Satoshi.
The lightning network distributed the system well. But there is also the possibility of becoming a centralized business model. In order to establish the network, transactions can become more active as a person who broadcasts a channel hangs a large amount of deposit. In this case, some channels may get full of users.
There are also concerns about security. In a network, transactional exchanges in the off-chain are likely to become hot-walled because they must always be connected to the network. You cannot rule out the possibility of exposure from hackers when you are online.
