The Lightning Network, proposed by Thaddeus Dryja and Joseph Poon, revolutionizes Bitcoin payments by introducing bidirectional and non-expiring payment channels. It leverages Hash-timelock Contracts (HTLCs) to facilitate atomic payments across multiple channels. While it has grown significantly since its launch in 2018, the system faces liquidity challenges where users need sufficient funding on the correct side of channels to receive payments. This article highlights key innovations of the Lightning Network and the implications of its liquidity dynamics on transaction efficiency.
The major breakthrough of the Lightning Network lies in its ability to facilitate bidirectional, time-unlimited payment channels, allowing for flexible and efficient micropayments.
Liquidity challenges are intrinsic to the Lightning Network, as users must have properly funded channels to receive payments, highlighting the complexity of effective routing.
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