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In this episode of “The Van Wirdum Sjorsnado,” hosts Aaron van Wirdum and Sjors Provoost discuss the basics of the Lightning Network, Bitcoin’s Layer 2 protocol for cheaper, faster, and possibly more private transactions.
Van Wirdum and Provoost explained from the outset that the Lightning Network works as a layer of scale because it allows users to make off-chain transactions via bidirectional payment channels: two users can pay each other any number of times without these transactions being recorded on the blockchain. They then explained how, in the Lightning protocol, these off-chain transactions are secure, that is, how each of the participants is guaranteed to claim their respective money from the payment channel at any time.
Then van Wirdum and Provoost explained how bidirectional payment channels can be linked across a network of users to expand the potential of off-chain transactions so that any Lightning user can pay any other Lightning user, even if they don’t have one done. specifically a payment channel between the two.
Finally, the hosts briefly discussed some of the challenges presented by the Lightning Network, in particular the requirement for payment channels to have sufficient liquidity.