Small transactions do not necessarily need to be recorded on the blockchain, which is the main idea behind the lightning network. Therefore, off-chain payment channels, which connect users, act as a second layer for conducting transactions.

For instance, if you want to exchange Bitcoins with a friend, you would open a payment channel by putting down a security deposit that is at least as much as the total transaction amount. Both parties are free to send money back and forth once the channel is open without affecting the main chain. The payment channel can be closed after you and your friend are finished using it and broadcast to the main network for validation.

Only two transactions, one for opening and one for closing the payment channel, are recorded on the blockchain when using the lightning network. Instantaneous payments, independence from miners, support for micropayments and multiple signatures, a reduction in blockchain load, shorter wait times, and assistance with scalability are some additional advantages of the lightning network.

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