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The difference between BTC on Lightning Network and BTC on chain?

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They are different BTC on Lightning Network from those on blockchain? What are the differences between BTCs commonly used in the chain and those used on LN?

Differences between BTC on Lightning Network and those stored in chain addresses

BTCs embedded on LNs are identical to BTCs stored on chain addresses, but their usage varies.

If you want to use BTC on the Lightning Network, you have to put it there. The total number of BTCs on LN is called “network capacity” and today there are a total of about 2,400 worth about $ 110 million. In total, those who opened their own channel on the Lightning Network to use it to send and receive BTC moved 2,400 BTCs from their chained wallets to their LN channels.

Currently, there are only 2,400 BTCs worldwide that can be used through the Lightning Network.

The main difference between BTCs that remain on chain wallets and those that have been moved to LN channels is that they can only be used on LN channels or sent to other LN channels.

However, any channel open on the Lightning Network can be closed if you wish, in which case the BTCs left on the channel are made available again on the wallet on the closed channel owner’s chain.

How the Lightning Network works

Each LN channel needs a supporting chain address to store BTCs for use on the channel, but only by closing the channel can they return to the address with which the channel was created. Physically, they are always stored at the chain address used to create the LN channel, but are immobilized. Therefore, they can only be used on a channel or unlocked by closing the channel.

Opening and closing the LN channel is free and can be done at any time, but both operations require the transaction to be registered on the blockchain. This transaction is not instantaneous, as are the ones on LN, and has classic transaction fees in the chain.

In the case of traditional chain addresses, they can only be sent to other chain addresses or are intended to create their own LN channel. This means that they cannot be sent directly from the chain address to the LN channel.

LN transactions

In the case of BTCs immobilized on an LN channel, they can only be sent to another LN channel or unlocked by closing the channel.

Although BTCs immobilized on an LN channel are not physically moved from an address in the chain, even if they are sent to another LN channel, at the time the channel is closed, only the BTCs remaining on the channel will be unlocked without any transactions made by the channel itself.

However, the biggest difference lies in the transactions: immediate and extremely cheap on the Lightning Network, slow and expensive on the blockchain.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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