⚡Lightning 101 - What is a Lightning Node?

Laszlo Hanyecz, famous for paying 10,000 BTC for two pizzas in 2010, bought two more pizzas in 2018 via Lightning Network for 0.00649 BTC

What does a Lightning Network node do?

A Lightning Network node has two primary responsibilities:

1. Monitoring the underlying blockchain: Every Lightning Network node must actively monitor the blockchain(s) on which it holds tokens. For most discussions, this refers to the Lightning Network operating on the Bitcoin blockchain. However, the Lightning Network can also function on other blockchains. Details on this will be covered in a future post.

2. Interacting with other Lightning Network nodes: The node facilitates transactions by communicating with other nodes within the network to transfer funds efficiently.

Why is it important for a Lightning Network node to monitor the underlying blockchain?

Due to the game theory principles underlying the Lightning Network, it is essential for a node to monitor the blockchain where it holds tokens. Failing to do so properly can result in the loss of funds.

What networks does a Lightning Network node interact with?

A Lightning Network node interacts with two distinct peer-to-peer networks:

1. The blockchain (e.g., Bitcoin) peer-to-peer network - Used for creating and settling Lightning channels.

2. The Lightning peer-to-peer network - Where transactions occur between nodes using Lightning channels.

What is the role of Lightning channels in the Lightning Network?

Lightning channels enable transactions between nodes on the Lightning network. Each node is responsible for tracking the balance within its channels, similar to a bartender keeping a tab at a bar. When a channel is closed, the final balances are settled on the blockchain.