Short version: Lightning Network for Bitcoin is a good thing that makes it more economically viable as a real currency for merchants. But it does not come without consequences.
Long version: In programming, simple is good. To understand the Bitcoin Lightning network you first need to get a grasp of cryptocurrencies. I like simple so here goes:
- You are working at a retail store selling engagement rings.
- As a jeweler you “check” out a diamond from the store safe to show to a customer.
- Your customer will either buy it, or give it back.
- If they give it back, you return it to the safe. You write “returned to safe” on a clipboard next to the vault.
- If they buy it you write “sold” on that clipboard.
BOOM, now you understand cryptocurrency!
You’ve got a diamond and a clipboard. That’s it.
So how does something so simple become so complex? Well, because us geeks can’t use normal words. So let’s focus on human-speak.
Accountability – In crypto, there is something called a blockchain. The blockchain is just a ledger. That’s it. It’s a clipboard saying who has the diamond.
Value – Scarcity. Diamonds are rare. Or, with crypto, it’s a big math puzzle that limits how fast those objects can be created.
Cypto Analogy: Diamonds and Clip-Boards
Mining for diamonds. They are scarce. People like them.
is the same as
Calculating the next value of PI, a really big math problem that takes time. Scarcity. **
As Crypto Currency is to Diamonds, BlockChain is to Clip-Boards.
That’s really it. That’s the whole thing. Any value in that object is purely in the mind of humans. So why so much ado about nothing?
Well, Bitcoin comes along and provides both scarcity (big difficult math problem) and tracking (blockchain ledger) and allows them to be done anonymously.
Yup, to be blunt – transactions are slow as heck. And the user interface is full of jargon from people like me who speak in some other language. And to be fair it does get technical. Ignore that for now.
Possible Solutions to Cryptocurrency Transaction Bottlenecks
The Bitcoin Lightning Network release. It’s kind of a big deal. It might just make BTC “do-able” for micro-payments again.
Example: You can’t buy your “$7-super-misto-double-shot-of-espresso” from Starbucks with bitcoin if you have to pay coinbase a usurious $30 transaction fee.
Thus, the BTC Lightning Network matters. Innovation is incremental. First the Internet, then the web.