Bitcoin Scalability: How Lightning Network and Its Nodes Address the Throughput Issue

Bitcoin has long been criticized for its low transaction processing speed — only 7-10 transactions per second. The Lightning Network is a second-layer blockchain solution that radically changes this scenario. If you want to understand why this technology is critical for the future of Bitcoin and how a bitcoin lightning node works, read this article.

History and essence of the innovation

The Bitcoin Lightning Network was first described in the whitepaper by Joseph Poon and Thaddeus Dreyzeh in 2015. However, practical implementation only began in 2018 with the launch of a beta version on mainnet. Over the years, the technology has come a long way from a theoretical idea to a fully functional system.

The essence of the Lightning Network is simple: instead of recording each transaction on the blockchain, participants create direct payment channels between each other. These channels function as private sessions where multiple transactions can be conducted off-chain. Only two events are recorded on the blockchain — opening and closing the channel. This approach relieves network congestion and allows for throughput of up to 1 million TPS.

How it works: from theory to practice

The Lightning Network is built on the principle of multi-signature wallets. Two participants lock a certain amount of Bitcoin into a channel and then update their balances without recording each update on the blockchain. If one participant wants to send funds to someone who does not have a direct channel, the payment is routed through a chain of connected channels — similar to people passing IOUs to each other.

Each bitcoin lightning node in the network operates independently but is connected to other nodes via payment channels. This creates a flexible ecosystem where anyone can join, open their own node, and start routing payments. Nodes earn fees for their services, incentivizing the network’s development.

Comparison: Bitcoin on Layer-1 vs. Lightning Network on Layer-2

It is very important to understand the difference between the main Bitcoin network and its scalable solution:

Security and decentralization: The main Bitcoin blockchain is critical infrastructure. Every transaction is verified by thousands of nodes, ensuring the highest level of security. The Lightning Network sacrifices some of this decentralization for speed and efficiency — a compromise that works for everyday payments.

Type of transactions: Bitcoin is ideal for large, infrequent transfers and store of value (digital gold), while the Lightning Network is designed for microtransactions, coffee payments, and constant settlements — similar to cash or credit cards.

Privacy: On the main network, all transactions are visible to all blockchain participants. The Lightning Network conceals payment details from outsiders — only the sender and receiver have the information.

Cost and speed: Bitcoin transaction fees can reach dozens of dollars during network congestion, with confirmation times of minutes. The Lightning Network offers transactions for satoshis and confirmation in milliseconds.

Versatility: Although the Lightning Network was created for Bitcoin, it also supports other cryptocurrencies — Litecoin, Ethereum, XRP, Zcash, Stellar. This makes it a tool not only for Bitcoin but also for cross-chain payments.

Why the Lightning Network is critical right now

With the advent of Bitcoin ordinals and BRC-20 tokens, the load on the Bitcoin blockchain is growing exponentially. Without a scalable solution, the network simply cannot handle the volume of operations.

Main advantages:

1. Relieving congestion: The Lightning Network increases throughput by hundreds of thousands of times, allowing the network to process exponentially more transactions without slowing down.

2. Instant payments: Instead of waiting for block confirmation (average 10 minutes), participants receive funds in fractions of a second.

3. Minimal fees: Even sending a penny of Bitcoin is possible with a fee less than a cent — opening new use cases for cryptocurrency.

4. Increased adoption: When Bitcoin becomes convenient for daily payments rather than just accumulation, its usage expands to millions of new users.

Practical application

A bitcoin lightning node is not just a theoretical concept. Today, thousands of nodes actively process payments. Anyone can run their own node on a computer, smartphone, or cloud server, becoming part of the infrastructure.

Use cases are growing: from microtransactions and streaming payments to cross-border transfers and merchant settlements. The Lightning Network enables Bitcoin to function as cash for the digital age.

Summary

The Bitcoin Lightning Network is not a competitor to the main Bitcoin network but its natural extension. If Bitcoin is gold, then the Lightning Network is cash that can be spent daily. As BRC-20 and other innovations on Bitcoin grow, this technology becomes not optional but essential for the healthy development of the ecosystem.