Bitcoin Terms Beginning with L
The Bitcoin network has several layers which enable users to use their bitcoin outside of the Bitcoin blockchain. Examples of layers include the Lightning Network and the Liquid Network. Layered solutions allow innovation without threatening Bitcoin's security.
Leverage is the use of debt to increase returns, buying power, capital, or asset financing. A firm or individual is leveraged when they use borrowed capital to increase or generate returns, or use debt to finance assets.
Last-in-first out cost basis method used to calculate capital gains and losses of Bitcoin sales. Bitcoin acquired last will be sold first.
A light client is a Bitcoin application, such as a wallet, that does not store the blockchain. A light client queries other nodes for specific transactions or blocks of interest. Light clients are less private and trustworthy than nodes, but are more convenient and less demanding of disk space.
A Lightning channel is a connection between two parties enabling instant, cheap transactions between the two parties. The Lightning Network is composed of thousands of channels.
A Lightning implementation is a software program capable of operating a Lightning Node and engaging with the Lightning Network. There are several different implementations of Lightning.
A Lightning invoice serves as a request for payment and includes the amount to be paid and the destination of the payment.
The Lightning Network (LN) is a protocol designed to allow instant and cheap Bitcoin transactions. While it is still experimental, it shows great promise for Bitcoin’s ability to scale.
The Lightning Network Penalty is a mechanism for discouraging attempts to double spend bitcoin using the Lightning Network (LN). Currently the LN Penalty confiscates the entire balance of a Lightning channel from an actor who attempts to publish an invalid state in order to steal funds.
A limit order is an order to buy an asset at a certain price or better. This order is not guaranteed to execute.
The Liquid Network is a sidechain protocol built on top of the Bitcoin blockchain. The Liquid Network offers several features not offered on the Bitcoin blockchain
Liquidity is a measure of how easily an asset can be traded on financial markets. The depth of an order book is often cited as a measure of liquidity.
A long position is a positive exposure to an asset. A trader with a long position wants the asset’s price to go up.