Are bitcoins on the Lightning Network different from those on the blockchain?
What are the differences between commonly used on-chain BTCs and those used on LN?
Some points differ between bitcoins put on Lightning Network and those held in regular wallets which operate directly on the blockchain.
It must be said that all bitcoins are still physically located on the blockchain, because the information recorded on this file consists of a chain of blocks that we usually call blockchain.
Differences between BTC on LN and those stored on chain addresses
BTCs on LN are also in this file, like everyone else, but that doesn’t mean they can be used in the same way at all.
Bitcoins put on LN are identical to those stored on chain addresses, but their use changes: the difference is there.
To use bitcoin on Lightning Network, you must put them there.
The total number of bitcoins linked to LN is called “network capacity”, and today there is a total of about 2,400, valued at approximately $ 110 million.
In total, those who opened their own channel on the Lightning Network to use it to send and receive bitcoin moved 2,400 BTC from their on-chain wallets to their LN channels.
Currently, there is only a total of 2,400 bitcoins that can be used worldwide via Lightning network.
The main difference between BTC left on chained wallets and those moved to LN channels is that the latter can only be used on LN channels or sent to other LN channels.
However, any open channel on the Lightning Network can be closed if you wish, and in this case, bitcoins left on the channel are once again available to the closed channel owner’s on-chain wallet.
How a Lightning Network Channel Works
Each LN channel needs a daisy chain address to store BTC intended for use on the channel, but only by closing the channel, can they revert to the address with which it was created in the channel.
Physically, they are always kept by the chain address used to create the LN channel, but they are immobilized. They can therefore only be used on the channel or unlocked by closing the channel.
The opening and closing of an LN channel is free and can be done at any time, but both operations require the recording of a transaction on the blockchain. This transaction is not immediate, like those on LN, and has the classic costs of a chain transaction.
The only thing you can do with both BTCs stored on on-chain addresses and those immobilized on LN channels is send them to another address.
In the case of traditional on-chain addresses, they can only be sent to other on-chain addresses or intended to create their own LN channel. That is to say, they cannot be sent directly from a chain address to a third party LN channel.
Differences between LN transactions
On the other hand, in the case of bitcoins immobilized on one LN channel, they can only be sent to another LN channel or unblocked by closing the channel.
Although bitcoins immobilized on one LN channel are not physically moved from the chain address, even if sent to another LN channel, when the channel is closed, only bitcoins remaining on the channel will be unlocked. net of all transactions made by the channel itself, incoming and outgoing.
In other words, if a Lightning Network channel is doing BTC sending or receiving operations, the BTC unlocked on close will easily be different from the BTC locked in when the channel was created.
However, the biggest difference is in the transactions: immediate and extremely cheap on Lightning Network, slow and expensive on blockchain.