While the Bitcoin blockchain is highly efficient in terms of security and decentralization, it is not inherently scalable, processing only 3-7 transactions per second. During periods of high activity, this limited capacity leads to network congestion, longer confirmation times, and rising transaction fees, making small or frequent payments impractical.
The Lightning Network addresses Bitcoin's scalability issues by enabling off-chain processing via payment channels. Once a channel is opened and funded, nodes can transact instantly without requiring block confirmations, eliminating the high on-chain fees. Only the opening and closing of channels are recorded on the blockchain.
This second-layer structure allows Bitcoin to handle a high volume of low-cost, real-time payments, while still relying on the underlying blockchain for security and settlement finality.