The Lightning Network is one of the most exciting breakthroughs in the history of cryptocurrencies. Before it, the largest majority of improvement ideas revolved around increasing the throughput of blockchains or adding other blockchains on top. But Lightning’s design enables transactions between peers at the speed of the users’ internet, with instant settlements and very little trust involved. In other words, it’s a much more elegant design which scales better than any blockchain simply because it no longer requires the entire network to store and verify everyone else’s transactions.

However, the Lightning network comes with quirks and intricacies of its own. If you don’t understand how it works, here’s a brief metaphor: Lightning nodes are like separate islands that are spread across a vast sea. In order for these islands to communicate with each other and engage in trade, they must build one-way bridges: so if island 1 wants to sent money to island 84, then island 1 must build a bridge to island 84; but if island 84 wants to also send a transaction to island 1, it can’t use the same bridge… so it must build a bridge of its own. In the Lightning context, these bridges are referred to as “channels”.

This is just the simplest example, which involves two parties which directly transact. But these islands usually conduct trade with lots of others — so it’s not always necessary to build new bridges, as there might be common connections whose architecture can be used. So if island 1 already built a bridge with the Litecoin Foundation while the Litecoin Foundation previously built a bridge to island 84, then the financial transaction can be relayed through the Litecoin Foundation. Since it provided a service through its infrastructure, the Litecoin Foundation will collect a small routing fee. We can also think of more intricate examples involving dozens of participants, and this situation leads to the kind of competition where the fastest route with the best connections will collect more fees.

The Lightning network was presented as a scaling solution for Bitcoin, but it’s blockchain-agnostic: meaning that every network that’s compatible with Bitcoin can add it on top. Litecoin never had a scaling debate and doesn’t really need this type of layer two.. at least, not yet. But there are still some privacy and speed benefits that Lightning offers, which can get complemented by atomic swaps across chains: basically, users can build decentralized and non-custodial exchanges through which they can trustlessly trade between BTC and LTC. The only reason why these were not standardized yet is that there wasn’t much demand for such a feature, as regulations regarding centralized solutions weren’t strict enough to incentivize such a development.

As of May 26th 2024, Litecoin’s Lightning network only has 95 nodes which opened 170 channels between each other. The capacity locked adds up to 35.27 LTC, which means that the adoption didn’t pick up too much. However, Litecoin has hosted Lightning network projects on main net for longer than Bitcoin did: back in early 2017 when using Lightning was deemed too “reckless” for Bitcoin, developers from Lightning Labs (creators of lnd) and ACINQ (creators of Phoenix wallet) were experimenting with features on Lightning, transacting LTC between one another.

As on-chain transactions become more expensive over the years, it’s very likely for Lightning on Litecoin to witness a resurgence. By then, the development of the second layer will have become much more mature, with many of today’s quirks and shortcomings being fixed in a way that makes deploying and operating a personal node more easy. For now, running Lightning on Litecoin doesn’t make much sense — especially when you’re using MWEB for fungibility and while the transaction fees are negligible. But the use case of doing atomic swaps between BTC and LTC might become a serious catalyst towards LN adoption. Here’s a personal story: back in March or April 2018, followed a Lightning network setup guide by legendary Litecoin contributor ecurrencyhodler and burned my SSD in the process. It wasn’t the fault of Lightning per se — probably any demanding application would have caused the same damage. But it’s a memorable story which reminds me of the thrills of being an early adopter.

Charlie Lee, creator of Litecoin, also referred to the Lightning network whitepaper as being the second most exciting scientific paper about money that he read since the release of Bitcoin. In October 2018, he also tweeted: “Bitcoin with Lightning Network more closely fits the Bitcoin whitepaper’s title: ‘A Peer-to-Peer Electronic Cash System’. This is Satoshi’s Vision.” As he frequently acknowledges in interviews, he is still an investor in Lightning Labs and other companies which use the Lightning network for payments. So he’s definitely onto something, though it might be a little too early for the rest of the world to realize. There’s a storm coming soon, and all freedom lovers are bound to be struck by Lightning!

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