Lightning Network

Definition ∞ The Lightning Network is a second-layer payment protocol built on top of a blockchain, primarily Bitcoin, to facilitate faster and cheaper transactions. It operates by creating off-chain payment channels between users, allowing multiple transactions to occur without immediate recording on the main blockchain. These channels remain open for a period, aggregating numerous small payments into a single, final on-chain settlement. This architecture significantly improves transactional throughput and reduces fees compared to direct blockchain transactions.
Context ∞ Current discourse surrounding the Lightning Network often focuses on its increasing adoption for micro-payments and cross-border remittances. Its utility is frequently highlighted in news articles discussing Bitcoin’s capacity to serve as a medium of exchange rather than solely a store of value. Technical developments continue to enhance its robustness and user experience, addressing challenges related to liquidity and channel management. The network’s expansion is a key metric for evaluating Bitcoin’s practical utility in everyday commerce. Debates persist regarding its decentralization and overall security characteristics.