Bitcoin&rsquo;s scalability</strong> by enabling transactions to be processed in a quicker manner across participating nodes. It works on top of the blockchain.</p>\n<p>However, there are certain fees linked with using the Lightning Network, and others argue that this scaling method is also <strong>vulnerable to hacking</strong>. The Lightning Network must also be continually connected to the internet, which might be difficult. Therefore, it does not permit BTC to be placed in <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cold-storage/">cold storage</strong></a>.</p>\n<p>The Lightning Network was originally considered to be able to take off the tension of the Bitcoin network, as well as decrease transaction costs. 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Pulls?","featured_image_id":6555,"status":"published","chapter_id":7,"language":"en","order":10,"modified_content":null,"preview_url":"https://www.bitdegree.org/crypto/learn/how-to-avoid-rug-pulls-in-crypto","featured_image":{"id":6555,"uuid":"80cbed9d-3b4b-45d9-9a85-d2d8108c0f32","public_url":"https://assets.bitdegree.org/crypto/storage/media/how-to-avoid-rug-pulls.o.jpg","path":"crypto/storage/media/how-to-avoid-rug-pulls.o.jpg","original_path":"crypto/storage/media/how-to-avoid-rug-pulls.jpg","name":"how-to-avoid-rug-pulls.o.jpg","original_name":"how-to-avoid-rug-pulls.jpg","title":null,"alt":null,"width":768,"height":478,"disk":"spaces","status":"uploaded","readable_file_size":"111.99KB"},"youtube_video":null},{"slug":"how-to-avoid-crypto-taxes","title":"The Key Legal Techniques of Avoiding Crypto 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Terms","updated":false,"chapter":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters/crypto-101-glossary.jpg","chapter_simple":"https://assets.bitdegree.org/crypto/assets/crypto-book/chapters-simple/crypto-glossary-101.jpg","rating":100,"sections":["A","B","C","D","E","F","G","H","I","J","K","L","M","N","O","P","Q","R","S","T","U","V","W","X","Y","Z"]}],"nextSection":{"id":467,"original_id":null,"author_id":40,"translator_id":null,"title":"What is Liquid Market?","slug":"what-is-liquid-market","section":"L","keyword":"Liquid Market","status":"published","definition":"is a platform where all the trades are executed with ease and at a low cost.","content":"<p>A liquid market is a market that has a large number of sellers and buyers as well as low transaction fees. Moreover, a trade market can be either <strong>a liquid market or a thin market.</strong></p>\n<p>For all asset types, liquidity is critical. The liquidity of a <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-coin/">coin/token in the crypto market is characterized as the capacity of the crypto asset to be readily exchanged into <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-fiat/">fiat or other cryptocurrencies.</p>\n<p>Speaking of which, the polar opposite of this market is a thin market with a large <strong>gap</strong> between accessible buyers and accessible sellers. Normally, there are few accessible purchasers and sellers.</p>\n<p>A liquid market, for instance, would be one of <strong>the major stock exchanges</strong>, where millions of shares are exchanged each day. This large volume of trades and conveniently doable operations take place at minimal cost, demonstrating that the market is, indeed, liquid.</p>\n<p>However, in comparison, due to the restricted number of purchasers in the market, real estate is not a liquid market. Despite the fact that there are a lot of sellers in this market in various parts of the world.&nbsp;</p>\n<p>Besides, the complexity of the real estate transaction procedure that also requires a number of documents and financial operations is a huge indicator as well.</p>\n<h3>What can Affect Liquidity?</h3>\n<p>For starters, usability is one of the aspects that might affect liquidity. With more individuals and merchants adapting to using cryptocurrencies as a payment method, it becomes more liquid.</p>\n<p>In addition, trading volume is another factor that affects liquidity.</p>\n<p>For example, <strong>if a crypto token/coin has a large daily trading volume, it suggests that many individuals are buying and selling it.&nbsp;</strong></p>\n<p>With the expanding quantity of exchanges, there are more possibilities for crypto trading. Hence, this contributes to its liquidity by participating in the adoption of cryptocurrencies.</p>\n<h3>Why Liquidity is Important?</h3>\n<p>To specify, prices are more stable when there is liquidity. Alternatively, massive trades can produce enormous <strong>price fluctuations</strong>, increasing unpredictability and dangers in the market. It also enables both buyers and sellers to settle trades quicker, resulting in a narrower <strong>bid-ask spread.</strong></p>\n<p>Whenever a market is sufficiently liquid, it establishes an optimum market price that is recognized by everybody. Because buyers and sellers are equal in such a market, it is impossible to influence the price.&nbsp;</p>\n<p>As a result, for a successful trading environment, traders must choose an asset with a sufficient level of liquidity.</p>\n<p>Likewise, investments may be readily converted into cash at a reasonable rate and in a timely manner. For illustration, if a person holds <strong>$100,000</strong> in US Treasury notes and loses their job, the money in these Treasuries is easily available, and the value is recognized since the market is liquid.</p>","level":"medium","meta_title":"What is Liquid Market? Definition & Meaning | Crypto Wiki","meta_description":"Liquid Market meaning: Liquid Market - is a platform where all the trades are executed with ease and at a low cost.","meta_keywords":null,"language":"en","created_at":"2022-03-22T06:58:47.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-liquid-market"},"prevSection":{"id":457,"original_id":null,"author_id":40,"translator_id":null,"title":"What is Libp2p?","slug":"what-is-libp2p","section":"L","keyword":"Libp2p","status":"published","definition":"is an open-source network protocol for creating modern, fully distributed applications.","content":"<p>Libp2p is a network utilized for decentralized <strong><a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-peer-to-peer-p2p/">peer-to-peer networking.</strong> It provides users the ability to generate modern, entirely administrated applications. Libp2p does this by offering particular tools aimed at developing peer-to-peer services and applications such as <strong>chat and file sharing.</strong></p>\n<p>Moreover, Libp2p's main goal is to offer simple abstractions for typical peer-to-peer use instances. It can serve as a basis for more customized peer-to-peer networks. Besides, by offering higher-level interfaces and adaptability, Libp2p also overcomes a few of the usual difficulties of creating P2P applications.</p>\n<p>Libp2p currently just has networking layers, but multiple other initiatives are continuing to expand the stack toward an entire decentralized web stack.</p>\n<p>The project was created by <strong>Protocol Labs</strong> with the goal to develop an entirely decentralized stack. In other words, it is <strong>an umbrella project</strong> that attempts to unite the disjointed environment of peer-to-peer protocols by offering clear <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-api/">APIs and guidelines that allow developers to quickly design dispersed apps.</p>\n<p>Additionally, Libp2p is the base for <strong>IPFS,</strong> nevertheless, it can also be utilized across other applications that require a network stack. Libp2p is also a networking library collection. It includes numerous concepts that aid in the development of strong, efficient, and portable applications:</p>\n<ul>\n<li>A set that includes <strong>TCP, UDP,</strong> and other common transport protocols.</li>\n<li>A libp2p network stack implementation for connecting multiple programs by specifying their network communications in a human-readable and understandable way.</li>\n<li><strong>The IPFS (interplanetary file system)</strong> and <strong><a href=https://www.bitdegree.org/"/crypto/buy-ethereum-eth/">Ethereum blockchains serve as the foundation for the network core.</li>\n<li>A modular and extendable abstraction layer for several networks means of transport, including UDP, TCP, HTTP1, WebSockets, tls, mqtt, as well as others.</li>\n</ul>\n<p>All in all, the libp2p architecture is made up of modular components that may be used alone or in conjunction with others. These components work together to create a versatile and expandable framework for developing and implementing <strong>decentralized protocols</strong>.</p>","level":"medium","meta_title":"What is Libp2p? Definition & Meaning | Crypto Wiki","meta_description":"Libp2p meaning: Libp2p - is an open-source network protocol for creating modern, fully distributed applications.","meta_keywords":null,"language":"en","created_at":"2022-03-21T14:52:10.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-libp2p"},"currentChapter":"L","currentSection":"what-is-lightning-network","chapterTitle":"L","readingLevel":"easy"},"url":"/crypto/learn/crypto-terms/what-is-lightning-network","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">
Crypto Terms: Letter L

What is Lightning Network?

Lightning Network MEANING:
Lightning Network - a second-layer payment protocol that runs on top of the blockchain.
Easy
1 minute

Let's find out Lightning Network meaning, definition in crypto, what is Lightning Network, and all other detailed facts.

The Lightning Network refers to the second-layer protocol that is created to acknowledge the issue of Bitcoin’s scalability by enabling transactions to be processed in a quicker manner across participating nodes. It works on top of the blockchain.

However, there are certain fees linked with using the Lightning Network, and others argue that this scaling method is also vulnerable to hacking. The Lightning Network must also be continually connected to the internet, which might be difficult. Therefore, it does not permit BTC to be placed in cold storage.

The Lightning Network was originally considered to be able to take off the tension of the Bitcoin network, as well as decrease transaction costs. Besides, transactions are typically done on the blockchain, but Lightning involves taking transactions off-chain.

Moreover, Bitcoin's skeptics have noted that, for the time being, the world's largest cryptocurrency is poorly equipped to perform a function similar to fiat, owing to its limited transaction capacity of roughly seven transactions per second. For instance, payment giants like Visa can manage tens of thousands.

The Lightning Network functions as a second layer for Bitcoin's blockchain, facilitating transactions by establishing payment channels. Likewise, transactions are way quicker since parties may transact with one another without the need for everything to be authorized by nodes.

The normal blockchain ledger, on the other hand, does require permission from nodes in the blockchain, each of which assesses the legitimacy of the transactions.