Turgon on Nostr: Basically On Liquidity and Routing in the Lightning Network The Lightning Network ...
Basically On Liquidity and Routing in the Lightning Network
The Lightning Network offers an excellent solution to reduce transaction fees on the Bitcoin network and speed up payments. However, the way payments are routed between participants might work differently than expected.
If person A wants to send Bitcoin to person C, but they don’t have a direct channel between them, the transaction is routed through a third party. For example, if you’ve received Bitcoin from person A and sent some to person C, person A can use your liquidity to send Bitcoin to person C.
The critical point here is the amount of liquidity you have in your channel. If person A wants to send 500 satoshis to person C, you need to have at least 500 satoshis in your channel to make that happen. If you only have 300 satoshis, the maximum amount person A can send is 300 satoshis. So, in the Lightning Network, liquidity plays a crucial role in routing payments.
Why doesn’t person A just open a direct channel with person C? Because opening new channels requires an on-chain Bitcoin transaction, which can be costly. The core advantage of the Lightning Network is minimizing these costs by routing payments through existing channels, making transactions more efficient.
#bitcoin #lightning #btc #nostr #network #introductions
Published at
2024-09-11 23:18:07Event JSON
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"content": "Basically On Liquidity and Routing in the Lightning Network\n\nThe Lightning Network offers an excellent solution to reduce transaction fees on the Bitcoin network and speed up payments. However, the way payments are routed between participants might work differently than expected.\n\nIf person A wants to send Bitcoin to person C, but they don’t have a direct channel between them, the transaction is routed through a third party. For example, if you’ve received Bitcoin from person A and sent some to person C, person A can use your liquidity to send Bitcoin to person C.\n\nThe critical point here is the amount of liquidity you have in your channel. If person A wants to send 500 satoshis to person C, you need to have at least 500 satoshis in your channel to make that happen. If you only have 300 satoshis, the maximum amount person A can send is 300 satoshis. So, in the Lightning Network, liquidity plays a crucial role in routing payments.\n\nWhy doesn’t person A just open a direct channel with person C? Because opening new channels requires an on-chain Bitcoin transaction, which can be costly. The core advantage of the Lightning Network is minimizing these costs by routing payments through existing channels, making transactions more efficient.\n \n#bitcoin #lightning #btc #nostr #network #introductions\nhttps://m.primal.net/KnNJ.png",
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