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3. What is Bitcoin and the Lightning Network?
In case you’re not already familiar, Bitcoin is a digital commodity that is the result of an effort to apply blockchain technology to create an ideal money. It represents a significant breakthrough in how society transacts and stores value beyond the limitations (and ethical violations) of the traditional banking system. Bitcoin is not perfect, given the limitations of blockchain technology, but its traits as potentially the most decentralized and secure crypto asset lays the foundation to create the most ethically and pragmatically sound money in history.
The Lightning Network is a layer of software that improves upon the limitations of the Bitcoin blockchain. It does so by employing a clever payment protocol that maintains a record of Bitcoin transactions without requiring that each is processed individually by the Bitcoin blockchain network. The result is drastically lower energy consumption, and a versatile payment network for anyone with access to the internet. The Lightning Network also enables incredibly inexpensive micropayments, which simplifies online value exchange, and opens access to the value of Bitcoin for the billions of people who can only afford a minute fraction of one.
Podcast listeners, for instance, are able to compensate content creators for their work and interact with them directly in a real-time creator economy. Another example is that people sending money to relatives across borders can do so for a fraction of a cent using Bitcoin on the Lightning Network. Value on the Lightning Network is typically denominated in “satoshis” or “sat”, of which there are 100 million per one Bitcoin.
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