Tuesday, 20 August 2019

The lightning network seems to be the answer to all Bitcoin and blockchain related ills: the ideal alternative to the clogged, clumped, over-crowded payment processing ecosystem we’re currently saddled with, with its slow speed, high transaction fees and all-around, ever pervading inefficiency.

Almost $38 billion worth of Bitcoin found untouched for over 5 years. So almost 4,000,000 bitcoins have not moved from their addresses for at least 5 years.

A question we often hear from new users is, “Why would I send bitcoin on the Lightning Network instead of directly on the Bitcoin Blockchain?” A question engineers often ask is, “Why would I build an app to use the Lightning Network, a smaller payment rail, instead of an app that works with the Bitcoin Blockchain/existing wallet programs?”

We are continuing our Lightning 101 blog series where we explore all things Lightning Network. In this post, we will investigate what Lightning Network invoices are and how they work.
A Lightning network invoice is how you receive payments on the Lightning Network. It is similar to bitcoin addresses but with some key differences.

An example Lightning invoice:

lntb1u1pwz5w78pp5e8w8cr5c30xzws92v36sk45znhjn098rtc4pea6ertnmvu25ng3sdpywd6hyetyvf5hgueqv3jk6meqd9h8vmmfvdjsxqrrssy29mzkzjfq27u67evzu893heqex737dhcapvcuantkztg6pnk77nrm72y7z0rs47wzc09vcnugk2ve6sr2ewvcrtqnh3yttv847qqvqpvv398

There are two parts to a Lightning Network invoice:

1. The “human readable” portion of the invoice
2. The “data part” portion of the invoice

The two parts are separated by the last character “1” found in the invoice.

lntb1u1pwz5w78pp5e8w8cr5c30xzws92v36sk45znhjn098rtc4pea6ertnmvu25ng3sdpywd6hyetyvf5hgueqv3jk6meqd9h8vmmfvdjsxqrrssy29mzkzjfq27u67evzu893heqex737dhcapvcuantkztg6pnk77nrm72y7z0rs47wzc09vcnugk2ve6sr2ewvcrtqnh3yttv847qqvqpvv398x

In our example, the “human readable” part is “lntb1u”. This represents:

1. The cryptocurrency network this invoice is valid for — in this example “lntb” indicates bitcoin test network.
2. The amount encoded in the invoice. — in this example 1u is the amount. This means 1 micro bitcoin or 0.000001 bitcoin.

The data portion of the invoice is:

pwz5w78pp5e8w8cr5c30xzws92v36sk45znhjn098rtc4pea6ertnmvu25ng3sdpywd6hyetyvf5hgueqv3jk6meqd9h8vmmfvdjsxqrrssy29mzkzjfq27u67evzu893heqex737dhcapvcuantkztg6pnk77nrm72y7z0rs47wzc09vcnugk2ve6sr2ewvcrtqnh3yttv847qqvqpvv398x

This can contain information such as:

1. When the invoice was created which is useful to see how old an invoice is
2. The ID of the node that is receiving the payment
3. When the invoice expires. Unlike bitcoin addresses, Lightning network invoices can expire
4. A description of this invoice. In our example, the description embedded in the invoice is “suredbits demo invoice”.
5. A backup bitcoin address. If the payment fails over the Lightning network, you can fallback to a regular bitcoin transaction.
6. A route to make the payment. Remember, the Lightning Network is different than a blockchain in the sense that you need to find a route to make a payment. The receiver of a payment can suggest a route for you to use to make the payment.

Invoices are also protected by digital signatures. This means if somebody modifies the Lightning network invoice, the signature will be invalidated. This is critical since there is sensitive information encoded in the invoice like the node ID, payment hash, and fallback address. If it was possible for users to modify these values, they could steal money from you.
Overall Lightning Network invoices are extremely flexible and useful. They provide much more meta information about a payment than a traditional bitcoin address. This allows users of the Lightning network to be more confident about when, where and how a lightning network payment is processed.

If you are an exchange or interested in what Lightning can do for you and your business, contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.
You can also reach us on the Lightning Network: This email address is being protected from spambots. You need JavaScript enabled to view it..

By Suredbits 
source: medium.com
Legal disclaimer: The insight, recommendations and analysis presented here are based on corporate filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. They are presented for the purposes of general information only, and all the information belongs to the original publishers. These may contain errors and we make no promises as to the accuracy or usefulness of the information we present. You should not make any investment decision based solely on what you read here.

- Surges in weekend activity since the beginning of May account for about 40% of Bitcoin’s price gains this year, according to data compiled by Bloomberg

- Bitcoin peaked at $19,666 on a Saturday in December 2017, according to data from Bitstamp

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