Lightning Network
A Bitcoin Layer-2 payment network using bidirectional channels to enable rapid, low-cost off-chain transactions.
Explain Like I'm 12
A Bitcoin Layer-2 payment network using bidirectional channels to enable rapid, low-cost off-chain transactions.
Why It Matters
Bitcoin-specific terms explain the architecture, monetary policy, and transaction model of the first major blockchain network.
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Related Terms
Mining
Mining is the energy-intensive process of securing a Proof of Work blockchain by verifying transactions and creating new blocks. This computational process involves hashing data to find a valid solution to a cryptographic puzzle defined by the network's current difficulty level. By performing this labor, miners ensure that all transaction history remains unalterable. This mechanism serves as a decentralized substitute for traditional financial intermediaries, ensuring trust is maintained through mathematics and economics rather than institutional oversight.
Proof of Work
Proof of Work (PoW) is the original blockchain consensus mechanism, requiring participants, known as miners, to solve complex mathematical puzzles to validate transactions and create new blocks. This process requires significant computational energy, which acts as a security barrier; to attack the network, a malicious actor would need to control more than 51% of the total network hashrate. PoW is prized for its simplicity, robustness, and proven track record in maintaining a censorship-resistant ledger.
UTXO
An Unspent Transaction Output is a discrete unit of spendable value created by a transaction and consumed as an input to a later transaction.
Bitcoin Improvement Proposal
A design document proposing a feature, process, standard, or informational change for Bitcoin.
Coinbase Transaction
The first transaction in a Bitcoin block, created by the miner to collect the block subsidy and transaction fees.
Difficulty Adjustment
Bitcoin's periodic process for changing the proof-of-work target so average block production remains near the intended interval.