Detail explanation of bitcoin with lighting network

Hello world, as we are in the 21st century we have seen much developments in science and technology.
Even our currency became digitalized. Cryptocurrency is one simple example of that.  Cryptocurrency is a digital currency which allows you to buy goods and services or simply we can say it is a medium of exchange.
Cryptocurrency is a virtual currency or alternative currency which have no physical existence but it is present in a digital form and helps to facilitate the financial transaction by using a very strong cryptography.
In today’s context, there are several crypto coins available in the Cryptocurrency world but the first Cryptocurrency was Bitcoin. Some of the Cryptocurrencies present in the Cryptocurrency world are highlighted below:

  1. Bitcoin
  2. Zcash
  3. Ethereum
  4. Ripple
  5. Dash

 

What is Bitcoin?


Bitcoin is a digital currency or a virtual currency which was the first decentralized Cryptocurrency which was created in 2009 by a Japanese citizen named Satoshi Nakamoto.
Simply, Bitcoin is an electronic currency which facilitates the financial transaction easily and smoothly. Bitcoin can be easily sent to any user on the peer-to-peer Bitcoin network and there is no any need or importance of intermediaries.
You don’t need any payment gateway or banking institution to transfer bitcoin from one user to another, it is all done electronically.  Bitcoin is one of the most popular Cryptocurrency in the world which have no any physical existence, it is simply produced or originated by the computer through a software.
For example: If you want to purchase any goods or services and the owner of goods or services agreed to accept bitcoin then you can pay this Cryptocurrency electronically, it does not need any banking institution or payment gateway. It is beyond the control of any institution.

What’s the difference between Bitcoin and the physical currency or traditional currency?


Everyone is curious to know the difference between the Bitcoin and the physical currency. So, the major difference between them are highlighted below:

 No any control:

As traditional or physical currency is controlled by the financial institution but bitcoin is beyond the control of any institutions. Bitcoin is decentralized and it does not need any intermediaries to transfer it from one user to other. It is all done electronically on the peer-to-peer Bitcoin network.

Identity verification:

In a traditional payment system the identity of the users is verified by the banking institutions. But in the case of Bitcoin user’s identity are not verified as it is decentralized and there are no any validators to verify. This is one of the main reason which made some of the countries of the world to make it illegal.

Immutability:

Another main difference between bitcoin and traditional currency is immutability. In a transaction of physical currency or traditional currency the amount transferred can be reversed but in the case of bitcoin, the amount transferred cannot be reversed. As it is not controlled by any institutions and the transaction process is done electronically. So it is quite impossible to reverse money but it has an escrow service which will make the financial transaction safer, easier, and more convenient for both parties.
Thus, above mentioned three points are the major difference between the bitcoin and the physical currency.

What is Lightning Network?


Scalability is one of the most challenging problems of bitcoin and of other cryptocurrencies.
Previously bitcoin was only able to transact 7 transaction per second which was good at that time but in the present scenario, it is not sufficient so to overcome from this problem Lightning Network is developed or created.
Lightning Network is a network which helps to facilitate a financial transaction at a lightning speed.  The Lightning Network is simply a payment channel which records its opening in the blockchain, it helps users to transact at a very high speed. The Lightning Network has solved the scalability problems of bitcoin and other Cryptocurrencies.
At first Lightning, Network was developed for use on bitcoin but in today’s context, lots of other cryptocurrencies like Litecon, Zcash, and Ripples are planning to implement it to solve the scalability problems.

How the Lightning Network works?

Lightning Network works by simply creating a second layer on the bitcoin blockchain which has multiple payment channels between bitcoin users.
So from this payment channels, the users can easily conduct a financial transaction easily, smoothly, and at a very high speed, it may take milliseconds to seconds.

Plasma of Ethereum:

Plasma of Ethereum is very much similar to the Lightning Network.
The developers of Plasma are Vitalik Buterin and Joseph Poon. They both developed Plasma to facilitate the smooth financial transaction. Plasma of Ethereum helps users to purchase tokens, cryptocurrencies, and the real goods and services at a very high speed.
One of the major similarities between Lightning Network and Plasma of Ethereum is that in both frameworks users do not need to identify or know or trust the other users to whom they are transacting, we can say that both are trustless networks. Plasma of Ethereum also plays a vital role in solving the scalability problems same as a Lightning Network.

What’s the difference between these two Frameworks?


So this is one of the most emerging questions in the crypto world. Everyone is curious to know the difference between these two frameworks. So below are some points which can differentiate Plasma of Ethereum and Lightning Network:

  1. The Lightning Network is developed or originated for moving transaction whereas Plasma of Ethereum is originated for moving computation.
  2.  Another difference between them is that Lightning Network facilitates a recurrent transaction between the same parties whereas Plasma of Ethereum is not limited to that. It’s literally BlockChains which helps to do transaction between other address too.
  3. In terms of speed, Plasma is very much superior to the Lightning Network. It is instantaneous that means confirmation is not necessary for Plasma of Ethereum.
  4. Another simple difference between these two is that Lightning Network is mainly developed to solve the scalability problems of Bitcoin blockchain and Plasma of Ethereum is developed to solve the scalability problems of Ethereum blockchain.

Therefore, above-mentioned points are some differences between the Plasma of Ethereum and Lightning Network.

Conclusion

In a conclusion, Bitcoin is a world most popular and world first virtual currency which helps users to do financial transaction electronically.
Both Lightning Network and Plasma are similar to each other, they both are developed to solve the problem of scalability of the Cryptocurrencies. However, there are some points which differentiate both of them and we have already discussed them in the above paragraph.

【Reference】
Lightning Network
Could someone explain the difference between the lightning network and plasma?
Plasma: An Innovative Framework to Scale Ethereum

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