What is Lightning Network and how does it work?

Lightning Network is a low-cost network that allows bitcoin micropayments to be processed instantaneously, providing greater "scalability" to the network, one of the objectives pursued by Satoshi Nakamoto since the creation of bitcoin.

The network works with double-layer protocols that serve to enhance some of the capabilities of the original protocol without making any modifications to it.

Therefore, the Lightning Network protocol is a revolutionary way to perform transactions within the Bitcoin network without the need for direct changes to the original system.

The Lightning Network (LN) project was created by Thaddeus Dryja and Joseph Poon in 2015. Currently Lightning Labs, Blockstream and ACINQ are the companies in charge of the network's development.

How does the Lightning Network work?

Lightning Network works by transferring the value derived from bitcoin ownership to the bitcoin ownership pledge. Therefore, it is not necessary to set up a direct channel to transact on the Lightning Network.

Payments can be sent to anyone through channels with people you are connected to, as the network automatically finds the shortest route and proceeds with the transactions.

Because the transactions are P2P, they do not need to be transmitted to the entire network, so they are almost instantaneous. And because there are no miners needing incentives, transaction fees are low or even non-existent.

Applications used on the Lightning Network

1. Financial smart contracts

Financial contracts are confidential and generate higher computational demand on the Blockchain, it is possible to perform transactions with highly advanced contract terms for the security of users.

2. Inter-chain payments or Atomic Swaps:

As long as there are similar hash functions on the blockchain, it is possible to route transactions on multiple chains with different consensus rules. The sender doesn't have to trust or even know about the other chains, including the destination chain.

Similarly, the receiver does not have to know anything about the sender's chain or any other chain. All that matters to the receiver is a conditional payment upon learning a secret on his chain.

3. Arbitrage in exchange:

There is currently an incentive to keep funds in exchange houses to be prepared for large market movements due to 3-6 block confirmation times. It is possible for exchange houses to participate in the Lightning network and for customers to transfer their funds in and out of the exchange for orders, almost instantly.

If the exchange does not have much market depth and commits to only allowing limit orders near the top of the order book, then the risk of coin theft will be much lower.

The exchange house, in effect, would no longer have any need for a cold storage wallet. This can substantially reduce theft and the need for third-party custodians.

4. Payment channels:

A means of transaction outside the Blockchain, where two people commit funds in one direction and pay each other by issuing payment commitments signed by the parties, avoiding having to wait for confirmations from the underlying blockchain.

The parties open a payment channel between them by sending funds in an initial transaction (Funding Transaction) to a 2-of-2 multi-signature address, which is managed by both involved and requires the signatures of both to generate new transactions.

This first transaction is propagated to the blockchain, leaving the channel effectively open.

To pay each other, the parties create transactions (Commitment Transaction) from the multi-signature address, which are not yet broadcast on the network, and whose consensual balances, resulting from off-network operations, are redeemable by the parties with or without the permission of the other and, if they do so, triggers the closure of the channel and the broadcast of the transaction on the blockchain network.

Main Lightning Network wallets

A custodial lightning wallet allows you to send micropayments, which means you can check the balance of a public Bitcoin address without the need to carry private keys on you.

You can use wallets such as Zap, developed by Jack Mallers, on both the test network and the main Bitcoin network, if manual modifications are made.

There are also other wallets such as Eclair, created by the ACINQ development group, and Lightning Desktop App, by Lightning Labs, both of which are in experimental stages.

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FTX is not the collapse of bitcoin

FTX, a cryptocurrency derivatives exchange, has recently come under scrutiny by some who claim that it is contributing to the collapse of the bitcoin market. However, these claims are unfounded and do not accurately reflect the reality of the situation.

First and foremost, it is important to understand that the value of bitcoin, like any other asset, is determined by supply and demand. The price of bitcoin fluctuates based on the market forces of buyers and sellers, and is not directly influenced by the actions of a single exchange like FTX. In fact, FTX is just one of many exchanges that facilitate the buying and selling of bitcoin, and its impact on the market is relatively small compared to the overall trading volume.

Furthermore, the claim that FTX is contributing to the collapse of the bitcoin market is not supported by any evidence. The value of bitcoin has been on a general downward trend over the past few years, but this trend is not unique to the time period in which FTX has been operating. In fact, the decline in the value of bitcoin began long before FTX was even founded, and can be attributed to a variety of factors such as market saturation, regulatory uncertainty, and competition from other cryptocurrencies.

Additionally, it is important to note that FTX is a regulated exchange that operates in compliance with the laws and regulations of the countries in which it operates. This means that the exchange is subject to strict oversight and is required to follow strict guidelines to protect its customers and ensure the integrity of the market. By operating in a transparent and compliant manner, FTX is actually helping to promote stability and trust in the bitcoin market, not contributing to its collapse.

In conclusion, the claim that FTX is contributing to the collapse of the bitcoin market is unfounded and lacks evidence. The value of bitcoin is determined by market forces, and FTX is just one of many exchanges that facilitate the buying and selling of the cryptocurrency. Furthermore, FTX operates in a transparent and compliant manner, and is actually helping to promote trust and stability in the bitcoin market.

Meet Solana and the most popular projects created on it

Solana is a blockchain network of decentralized nodes that allows the scheduling of smart contracts. This network is programmable, as it uses Proof-of-Stake and Proof-of-History consensus, to order on-chain events.

Solana's development began in 2017 when its creator, Anatoly Yakovenko, started working on a network that would be robust enough to operate as synchronously as if it were a single node.

Solana's native coin (SOL) is one of the most important cryptocurrencies in the ecosystem, behind Bitcoin, Ethereum and major stablecoins such as USDT and BUSD.

Solana uses the Proof of Stake consensus, which replaces the Proof of Work to extend its stability and security within the network, while the Proof of History increases the scalability of its blockchain, keeping its decentralization and security intact, through a history that records the events along the executed activities, thus avoiding the loss of time when performing fast transactions.

How does the Solana network works?

Solana works as a Proof of Stake recognition network independently of the validation through Proof of History, this allows its owners to participate and ensure the operation of the network by staking, with the incentive of receiving more SOL tokens in return.

SOL is mainly used to pay commissions when trading through dapps. However, it also allows fees to be paid when creating dapps, programming smart contracts, in mining NFTs or for performing value transfers on its blockchain.

Solana has a wide gallery of decentralized financial products and services (such as Orca or Solend), cryptocurrency and NFT marketplaces (Magic Eden, Solanart), as well as several blockchain games such as e.g. DeFi Land.

Here we will show you the most important projects in Solana that besides having a solid base have a great community and a team of skilled developers behind them.

Serum: It is a non-custodial decentralized exchange (DEX), which has become popular due to its high transaction speed and low fees.

Recently, the Solana community announced the launch of Vybe DEX, a data-driven trading interface powered by Serum's central limit order book and matching engine, which allows the community to query, index and share data on-chain to create dApps and web analytics3.

Raydium: It is an automated market making mechanism (AMM) and liquidity provider on the Solana blockchain for Serum. It is also the first AMM project within Serum.

Raydium's mission is to attract new and existing projects and protocols to the Solana ecosystem.

Star Atlas: Is a multiplayer navigation blockchain game, which has become one of the most promising games of the year, not only for the gameplay it offers, but for the Unreal Engine 5 and Nanite graphics engine with which it is being developed.

The game seeks to establish a metaverse with an open economy, where players can experience absolute freedom and earn ATLAS tokens by playing.

Star Atlas has strategic and economic elements that will allow players to have a fun experience while earning money.

Solarians: It is a collection of 10,000 totally randomized NFT robots made on the Solana block network. Each Solarian is different from the others, and some of these NFTs have Easter eggs that were specially drawn by the artist.

This is Solana's first on-chain generative NFT project. Another interesting fact is that his team was involved in the creation of Digital Eyes, Solana's first open NFT marketplace.