Can anyone explain the "Lightning Network" to a 5 year old

[mondrany]

I grasp that the lightning network is going make transactions cheaper and faster.

Can anyone explain how does it work, the pros and cons?

Much appreciated!   

[1714928614]

1714928614

[1714928614]

1714928614

[1714928614]

1714928614

[1714928614]

1714928614

[Rhegz]

In my own opinion it won't possible that you can discuss it especially with a 5 year old. Networking is broad and hard to tackle or understand, but if you will open your heart and mind to understand it, possible that you can but for a 5 year old no i don't think so.

[mondrany]

In my own opinion it won't possible that you can discuss it especially with a 5 year old. Networking is broad and hard to tackle or understand, but if you will open your heart and mind to understand it, possible that you can but for a 5 year old no i don't think so.

Thanks Rhegz,

Would you be able to give me a basic explanation of LN?

[mocacinno]

Well, very, very, very, very dumbed down and simplified, the lightning network is basically something like this:

Person A opens a payment channel with person B. Person A and B funds the channel using an on-chain transaction of (for example) 10 BTC.
Person A can now send (for example) 20 offchain transactions of ~0.1BTC to person B (for example, person A has a ipTV subscription with person B, and he pays 0.1 BTC/month for his subscription, every month). Everytime, the status of the channel gets adapted with an offchain transaction.
If, in the end, the channel gets closed, the final status gets recorded into a transaction and broadcasted to the network.
So, in this case 18 on-chain transactions were avoided, only the funding and withdrawing transaction were on-chain.

Now, imagine person C. He opens a channel with person A.
He can now send 0.1 BTC to person B, since person A has an open channel with person B, and the channel is still funded. So in reality, person C sends 0.1 BTC offchain to person A, person A sends 0.1 to person B, so person B receives the 0.1 BTC that was sent by person C. Person's C available funds are reduced by 0.1 BTC, person A still has the same amount of funds as before the transaction, person B has 0.1 BTC more than before the transaction (fees were not taken into account with this very simplistic example)

When sufficient people have open (funded) channels with eachother, you can basically send funds over the lightning network to any person that has at least 1 or 2 open channels. Each node in the network can add a tiny fee, but it is also possible to minimise the fee by calculating the optimal path between 2 nodes/wallets/people.

[mondrany]

Well, very, very, very, very dumbed down and simplified, the lightning network is basically something like this:

Person A opens a payment channel with person B. Person A funds the channel using an on-chain transaction of (for example) 10 BTC.
Person A can now send (for example) 50 offchain transactions of ~0.1BTC to person B (for example, person A has a ipTV subscription with person B, and he pays 0.1 BTC/month for his subscription, every month). Everytime, the status of the channel gets adapted with an offchain transaction.
If, in the end, the channel gets closed, the final status gets recorded into a transaction and broadcasted to the network.
So, in this case 48 on-chain transactions were avoided, only the funding and withdrawing transaction were on-chain.

Now, imagine person C. He opens a channel with person A.
He can now send 0.1 BTC to person B, since person A has an open channel with person B, and the channel is still funded. So in reality, person C sends 0.1 BTC offchain to person A, person A sends 0.1 to person B, so person B receives the 0.1 BTC that was sent by person C. Person's C available funds are reduced by 0.1 BTC, person A still has the same amount of funds as before the transaction, person B has 0.1 BTC more than before the transaction (fees were not taken into account with this very simplistic example)

When sufficient people have open (funded) channels with eachother, you can basically send funds over the lightning network to any person that has at least 1 or 2 open channels. Each node in the network can add a tiny fee, but it is also possible to minimise the fee by calculating the optimal path between 2 nodes/wallets/people.

Thanks for your explanation mocacinno!

[mocacinno]

Thanks for your explanation mocacinno!

No problem
Do realise that this is a seriously flawed explanation i dumbed down to give a basic idear of what the lightning network is... I even had to correct a mistake i made during the creation of the post.

I myself only started experimenting with the lightning network for less than 2 weeks, i don't know all the in's and out's yet either, but i'm slowly gaining knowledge.

If you want to experiment, setting up a lightning network node is really easy... Just get yourself a small linux VPS (or install linux on your pc), install a bitcoin core deamon, sync it with the testnet, then compile https://github.com/ElementsProject/lightning and follow their very basic how-to tutorial... It took me about 2 hours to set everything up (granted, i already had a bitcoin testnet node running, so i didn't have to sync the testnet blockchain), i ran into some problems, but cdecker helped me out
In my opinion, the best way to learn about a technology is to get some hands-on experience, and since bitcoin has a pretty stable testnet, you can get this hands-on experience without risking any real BTC (losing tBTC is not really a problem)