What is the Lightning Network?
Correct answer
Answer C: A second layer for fast Bitcoin payments.
Quick explanation
Lightning is built on Bitcoin and allows many fast payments without recording each one directly on the blockchain. This reduces the load on Bitcoin's base layer.
Detailed explanation
The base layer provides settlement and independent verification, but its block space is limited. Unlimited growth would increase storage, bandwidth and validation requirements.
Lightning enables many payments through channels and uses the base layer for opening, closing and enforcement. Liquidity, routing, availability and security requirements remain.
Other layers, custodians or federated systems can increase capacity but change trust assumptions and risks. They must not be presented as equivalent.
Scaling involves trade-offs between throughput, costs, verifiability, decentralization, privacy and usability. No single layer meets every requirement.
Example or everyday application
On-chain settlement provides a robust base layer; Lightning groups many payments in channels but brings its own liquidity and operating requirements.
Common misconception
Scaling is not just one metric, and no layer resolves every trade-off.
Sources used
Lightning BOLTs - Introduction
This source is mainly intended for developers. The relevant information may therefore be harder to find.
Check original sourceLightning BOLTs
This source is mainly intended for developers. The relevant information may therefore be harder to find.
Check original source