Steemit Crypto Academy / Season 3 / Week 8/ Advanced Homework Submitted To Professo r @sapwood. Lightning Network.

Introduction

I feel so excited learning more about how to handle the scalability problem of the bitcoin network using the second layer network known as the Lightning network. This really is a great lecture offered by Prof. sapwood.

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Taking your first steps on the Lightning Network
The Lightning Network is expected to allow for instant and cheap Bitcoin payments.

For many types of transactions, Bitcoin can be an insanely frustrating experience. Having to wait for a payment confirmation for hours when making a purchase in person, or carrying the risk of accepting a transaction with zero-confirmations is unacceptable in many cases.

What is the Lightning Network?

The Lightning Network is a separate network built on top of Bitcoin. You don’t have to use it, and all your existing Bitcoin wallets and transactions will continue to function as usual.

The Lightning Network is expected to allow for instant and cheap Bitcoin payments between participants of Lightning without compromising on Bitcoin’s security and decentralization.

To use the Lightning Network, you will have to set up at least one channel, which will cost you the price of a Bitcoin transaction. But you can then make as many small payments as you want for little to no cost until your account is empty.

If you want to take your money out of the Lightning Network, this again costs the price of a Bitcoin transaction.

The Lightning Network, therefore, is only attractive if you intend to make multiple payments, and does not help with lowering fees for individual, traditional payments. But once you are set up for the Lightning network, you will not only be able to make payments to a single merchant but every merchant and individual in the network.

How does the Lightning Network work?
In the Lightning Network, participants open payment channels, which are 2-of-2 multisignature wallets. In this payment channel, the two participants can send each other tiny amounts of Bitcoin—called Satoshis—without having to settle the transaction on the Bitcoin Blockchain, meaning each transaction costs only a small fraction or nothing at all.

Only when a channel is opened or closed is a Bitcoin transaction necessary.

How to use the Lightning Network
You can already use the Lightning Network on the Bitcoin Testnet, a clone of the Bitcoin network in which coins don’t have any value. Bitcoin Testnet makes it easy to experiment with software that might otherwise still have bugs, and to make tons of transactions without having to worry about money.

Because explaining stuff theoretically is far less fun than trying it out, here is our step-by-step guide on how to make payments with the Lightning Network on the Testnet.

Create a Testnet wallet in Copay in Advanced Settings.

As soon as your funding payment is confirmed, you can open a channel.

Starblocks

On Starblocks you can buy virtual coffee instantly with Bitcoin

#Bitrefill

Bitrefill has a test site where they accept Bitcoin.

To see how much you can currently receive, head to ‘Channels’ in your app.

As long as it comes from the same node that made the initial payment, you will get your coins.

The Lightning Network is the future
It feels very exciting to use the Lightning Network for the first time, even though it clearly has a few bugs. It will take a while for individuals and companies to have enough trust to use it for everyday transactions, but it will happen significantly faster than it took Bitcoin .