Lightning Network: What Is It and How Can It Be Profitable for You?
November 23, 2022 (Investorideas.com Newswire) In the crypto world, Bitcoin provides a way for people to invest and potentially win big, but that's not the only use that it has today. With the growing acceptance of the use of cryptocurrency, people now have more avenues in which they can transact using cryptos.
That's why many are setting up a non-custodial Lightning Wallet using lightning network tech to improve the speed of Bitcoin transactions while also reducing the fees associated with them. But if you've just entered the huge and ever-expanding world of blockchain technology, you're probably wondering what the lightning network is.
Learn more about what the lightning network is, how it's relevant today, and how it can be a great opportunity to profit.
What Is the Lightning Network?
To better understand the value of the lightning network, we should first talk about why Bitcoin exists. At first, it was to allow safe and anonymous transactions online. People could and still can do just that, but there's one problem: it wasn't ever meant to be scalable.
So as Bitcoin skyrocketed in popularity, transactions became slower and more expensive. That's where the lightning network came in. First proposed by Thaddeus Dryja and Joseph Poon in 2016, it was meant to solve this main issue to further encourage the use of Bitcoin in everyday transactions.
Just like your primary blockchain, the lightning network doesn't use banks and other traditional financial institutions as an intermediary. Therefore, it helps retain Bitcoin's feature of being decentralized. But to solve the issues, this tech introduces multiple payment channels between parties to achieve its purpose. The result? Cheaper, faster, and more easily verified crypto transactions.
How Did It Affect Bitcoin Transactions?
The biggest benefit is still with the users. Those who use Bitcoin to perform various digital transactions will now be able to complete payments using this cryptocurrency more quickly and affordably. But because it's a relatively new technology, not a lot of users know that this option even exists.
Still, the developers involved with the tech are very positive about the potential of this tech. They continue to develop it, even managing to increase its capacity by 25% in just four months. As the solution gains more popularity, it will be easier to accommodate users.
But investors are also delighted with the developments. Many are contributing to raising funding, further developing this new tech to become more profitable in the future.
Ways to Profit from the Lightning Network
Fortunately, it's not just investors who can take a slice of the current and future profitability of this tech. There are two ways that you can profit from it:
Buy and Hold Bitcoin
You're probably doing this already. And if so, congratulations! You're helping ensure that there's a continued demand for the lightning network.
The value of Bitcoin is relatively low right now. So, if you're looking for a long-term investment, this is something that you might want to consider.
Earn a Passive Income with a Lightning Node
If you're willing to invest more for more potential gains, running a lightning node can be a way to gain passive income. You'll need to fund your lightning channel, purchase equipment, and have a lightning wallet.
It's up to you how high your fees will be, but to attract users early on, it's best to study more on the subject.
Conclusion
The demand for the lightning network only exists because many people are using Bitcoin to transact. So, the more people that know about and use the lightning network, the better.
Will the lightning network sustain the early successes it has now? The current situation is rather positive, so you can get on board and be an early adopter. Anyway, don't forget about the potential risks linked to cryptocurrency.
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