A second layer solution on the Bitcoin network that allows you to make instant micropayments, the Lightning Network drastically reduces the cost and latency of Bitcoin transactions.
Technically speaking, the Lightning Network is based on payment channels that are set up between Bitcoin users and serve to reduce the load from the main Bitcoin blockchain. A channel is a connection between two nodes that allows them to send bitcoins to one another without having to notify the entire Bitcoin network. Transactions sent through the Lightning Network are thus not included in Bitcoin blocks, freeing up space for more activity on the main blockchain. Only when a channel is opened or closed is a transaction broadcasts on the main Bitcoin blockchain.
Furthermore, Lightning allows two people to send money to each other even if they don’t have an open channel between them. It knows how to hop through existing channels to get the money to its destination. For example, say Avron and Bernice have a channel, and Bernice and Chemel have a channel, Avron can pay Chemel by hopping through their mutual friend Bernice. Suddenly, Bitcoin can scale into the billions of transactions per second.
