► This clip is from my monthly Live Q&A. Ask your own questions: https://cracktheorange.com
I explain what the Lightning Network actually is, which role it plays when Bitcoin transaction fees rise and how it works.

Lightning IS Bitcoin, it just operates on another network level. Bitcoin is the base layer protocol, while the Lightning protocol is a second layer on top of the Bitcoin protocol that enables fast payments with lower transaction fees and more privacy. The Lightning Network is an important step in scaling Bitcoin to make it usable for everyday payments and for a wider audience.

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TRANSCRIPT
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The Lightning network is another Bitcoin protocol, basically. You can imagine yourself like, think about the Bitcoin blockchain as a layer. So the blockchain is the base layer, it's called on-chain. Every transaction on the Bitcoin blockchain needs at least 10 minutes until it's validated and put on the blockchain, so it's finally settled and confirmed. And also transaction fees on the Bitcoin blockchain can rise, they can become as high as, I say in the future maybe even $70, $100 or whatever. And even now sometimes it doesn't really make sense for you to use the Bitcoin blockchain on-chain because the fees are sometimes higher than the amount you want to send. Because the Lightning network sits basically on top of the Bitcoin blockchain and is connected to the blockchain via payment channels, that means that every payment you do in Lightning is always connected to the blockchain. That means that Lightning payments are immediately settled, so you don't need to wait 10 minutes until you get a confirmation for it. It's immediately basically in the custody of the other person that you sent the money to. That of course is only true if you use a self-custody Lightning wallet. I know that many people are using the Wallet of Satoshi which works great but it's a custodial wallet, meaning that there is a company behind and they actually own the keys to your bitcoin. It's a little bit comparable with exchanges like Binance, for instance, or Kraken or Coinbase where you don't own your bitcoin really. You have an account like in a bank. So Wallet of Satoshi is very convenient and self- custody Lightning wallets haven't been so convenient until recently.

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No financial advice. Do your own research.
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