// GLOSSARY -- PAYMENTS & FINTECH

What is Lightning Network?

1 min read Updated

The Lightning Network is a Layer 2 payment channel network built on Bitcoin that enables instant, low-cost Bitcoin transactions — making Bitcoin practical for everyday payments and micropayments.

WHY IT MATTERS

Bitcoin's base layer is slow (~10 minute blocks) and expensive. The Lightning Network solves this: open a payment channel, send thousands of instant Bitcoin payments, and settle the final balance on-chain. Fees are fractions of a cent.

Lightning channels can route payments through intermediary nodes, creating a network. You don't need a direct channel with every counterparty — payments hop through connected nodes to reach the recipient.

Lightning adoption is growing for: point-of-sale payments (especially in El Salvador), micropayments (content tipping), and machine-to-machine payments. It makes Bitcoin a viable payment medium, not just a store of value.

FREQUENTLY ASKED QUESTIONS

How fast is Lightning?
Near-instant — payments settle in milliseconds to seconds. This makes Lightning competitive with credit card speeds for point-of-sale use.
How cheap is Lightning?
Fees are typically less than 1 cent, even for small amounts. This enables micropayments (fractions of a cent) that are impossible on-chain.
Do I need to run a node?
Not for basic use. Mobile wallets (Phoenix, Breez) handle channel management. Running your own node gives more control and privacy but requires technical knowledge.

FURTHER READING

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