Starbackr is built on Bitcoin, but utilizes the Lightning Network for most of the transactions. In this post, we will give you a quick overview of the Lightning Network and how it can benefit content creators worldwide.
So What Is It?
The Lightning Network (LN) is a second layer built on Bitcoin. It consists of many Peer-to-Peer payment channels. The most simplified legacy comparison of such a channel would be a tab at your local bar. Instead of paying your barkeeper for every single drink, you can write it on your tab and settle everything at once later. Lightning is similar to that but secured cryptographically. Once a transaction is on the tab, the barkeeper can enforce it at any time, there is no way for you or the barkeeper to cheat.
The cool thing is, that you don’t need a direct payment channel with anyone, a route through the network is enough. Let’s say you have a channel with Bob and Bob has a channel with Charlie. You can now pay Charlie through Bob. You will put the amount of the transaction on your tab with Bob and he will put it on his tab with Charlie. That’s called routing.
The Lightning Network was built to increase Bitcoins transaction throughput. Most Lightning transactions cost less than a penny and are literally lightning fast.
Are There Transaction Fees With Lightning?
Yes, although they are very different from the standard Bitcoin transaction fee. When you send a transaction on the Bitcoin network, you will have to pay a mining fee for a miner to include your transaction in the blockchain. As Lightning payments are not settled on the Blockchain, there is no mining fee. However, as mentioned above, the network relies on peers routing payments and they demand to be paid for doing so. That’s why every Lightning transaction has a very tiny routing fee (most of the time it’s less than a penny).
How the Lightning Network Empowers Content Creators
Bitcoin enabled content creators to monetize their work without them having to rely on a centralized network of payment processors, that tend to abuse their power, taking hefty cuts and arbitrarily excluding users. It’s 100% inclusive and available to anyone with a smartphone.
The Lightning Network goes even further. With its low fees and instant payments, Lightning unlocks a whole new world of monetization models like for example Streaming Sats, where a user pays a streamer by the second. Because the handling of payments is so easy and frictionless, there is no need for minimum prices and payout thresholds anymore. Bitcoin and the Lightning Network truly empower creators!