A parallel network to Bitcoin that handles a high volume of transactions, typically with lower monetary values. The Lightning Network confirms the transactions much faster and with lower fees than Bitcoin. Deployed in 2016 and known as a "Layer 2 blockchain," the Lightning Network executes multiple transactions and periodically commits a summary to the Bitcoin chain (Layer 1), making the transactions tamperproof. As Bitcoin became more popular, a Layer 2 network became indispensable to keep up with the traffic. In 2021, the Lightning network soared with more than 15,000 nodes in operation.
Payments between two parties are established as bidirectional smart contract channels. When either party closes the channel, the total is settled on the Bitcoin chain. If a channel is not open between two parties, payments can still be routed between them if there are other open channels to provide a path. See
Bitcoin,
Layer 2 blockchain and
blockchain.