More Examples
“Layer 2 technologies can help make bitcoin more efficient.”
“Lightning Network and SegWit are examples of Bitcoin’s second layer.”
“Bitcoin’s 2nd layer could potentially enable unlimited transactions per second.”
Definition(s) from the Web
- As Bitcoin has become more popular, the limit began to slow down transactions. A block is added to the chain every ten minutes. With a limit on its size, only so many transactions can be added, as many as fit in a block. Globally, bitcoin cannot currently support transactions with anything like the speed of other currencies or credit cards. It sometimes takes hours to confirm a transaction. Some sites work around this problem, by conducting “off-chain payments”, conducting transactions without waiting for confirmation by the blockchain. Source
- SegWit proposes significant backward compatibility. It hides its increased block size by changing the definition of a block to be measured as one million “units” instead of bytes. The “witness” signature data would be separated from the Merkle tree record of who is sending or receiving the bitcoin. The “witness” data is moved to the end, and each byte of it would only count as one quarter of a “unit”. The overall effect would be changing the average block size to about 1.8 MB instead of 1. This means the existing bitcoin protocol doesn’t change, allowing it to work without as much upgrading of software.. It also addresses signature malleability, by moving signatures out of the transaction data, making them impossible to change. The transaction ID is no longer malleable. This makes bitcoin safer to use with Lightning Network, a way to speed up small payments by bundling them and only writing to the blockchain at the beginning and end of their execution, which would be (slightly) risky while the malleability problem still exists. Source
- Lightning Network is the additional payment protocol, a layer embedded on top of a blockchain to enable users to send or receive payments instantly and at zero cost. It involves the use of peer-to-peer payment channels that mean users can defer broadcasting their transactions to the blockchain, making it scale. It is intended to help Bitcoin cryptocurrency scale. Source
- The Lightning Network is a protocol that aims to improve bitcoin’s scalability and speed without sacrificing trustless operation. The Lightning Network requires putting a funding transaction on the blockchain to open a payment channel. Once a channel is opened, connected participants are able to make rapid payments within the channel or may route payments by “hopping” between channels at intermediate nodes for little to no fee. Source
