I often discover on almost a daily basis how elementary my knowledge of cryptocurrency is. Even though I have been in this space for over 4 years I am still learning new things every day, somethings which I have trouble understanding. Lightning Network is one of those things, and as it pertains to Bitcoin, it is actually a huge deal. Therefore I will do my best to pass on what I understand and further provide some resources that break down the concept better than I currently can.
Lightning Network is a scaling solution for blockchains, not just for Bitcoins’ Blockchain. It allows the creation of ‘payment channels’ that allow multiple parties to perform transactions with each other and then to settle those transactions on a blockchain. Aka 2 or more parties could have thousands of transactions and settle the entire exchange with 1 transaction on the blockchain, therefore greatly reducing the amount of transactions needed to be secured within blocks.
This means that the current limit of roughly 7 transactions a second, that Bitcoin allows, could theoretically allow for an exponential amount of transactions using lightning to still be verified in a secure manor without bloating the chain. Think making trades with a friend for days or weeks and then settling all those transactions at once on a secure ledger, aka the blockchain. This would facilitate the thousands and eventually millions of transactions needed to disrupt payment giants like VISA.
The implications for this are vast because at the point where Bitcoin can do everything VISA can, VISA becomes Blockbuster, and we all know how they ended up. Now that Segwit is locked-in, lightning will soon follow. Another coin that has Segwit, and will soon have lightning is Litecoin, something I still believe to be undervalued and a good long term investment.
If you would like further reading on the subject, these are two things I found useful in helping my understanding of Lightning Network:
The coin is strong.