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Lightning Network

In IcelandicLeifturnetið

A payment network on top of Bitcoin that makes bitcoin payments almost instant and cheap, without recording each payment on the blockchain.

The Lightning Network is a payment network built on top of the Bitcoin networkBitcoinThe first and largest cryptocurrency: a digital currency that no single party controls, with a fixed limit of 21 million coins.. It lets you send bitcoin almost instantly for a tiny fee, because payments are not recorded one by one on the BlockchainBlockchainA public ledger where transactions are grouped into blocks, each linked to the one before, so past records can't be altered without it showing..

How does the Lightning Network work?

The Lightning Network is built on payment channels. Two parties lock bitcoin into a shared channel with a single transaction on the Bitcoin network. After that, they can pay each other back and forth as often as they like, and only the balance between them changes. When the channel is closed, the final balance is recorded on the Bitcoin network.

It is a bit like running a tab at a café. Each coffee goes on the tab, and you settle up with one payment at the end of the month.

Payments can also be routed through other people's channels. So you don't need to open a channel with everyone you want to pay.

The Lightning Network is an example of a layer 2Layer 2A system built on top of a blockchain such as Ethereum or Bitcoin to make transactions faster and cheaper than on the base network itself. on top of Bitcoin.

What to know

  • Made for small payments. The Lightning Network is designed for everyday payments, in shops or online, rather than for holding savings.
  • A different kind of payment request. You pay a Lightning invoice, not an ordinary Bitcoin wallet address. Both sender and recipient need to support Lightning.
  • Usually a hot wallet. Lightning wallets usually need to be online, which makes them hot walletsHot walletA crypto wallet on an internet-connected device such as a phone or computer, convenient for everyday use but more exposed to attacks., with the risks that come with that.

Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.