L1 / LNSOURCE-LED COMPARISONS
On-chain Bitcoin vs Lightning: when to use each layer
Compare base-layer settlement with channel-based payments built on top of Bitcoin.
On-chain transactions change the globally replicated Bitcoin ledger. Lightning payments update balances through channels and use the base layer for opening, closing and dispute resolution.
High-value settlement, self-custody transfers and channel management.
Frequent, fast or small payments when liquidity and routing are available.
Depends on block inclusion and the desired number of confirmations.
Usually settles between participants within seconds.
Pays for scarce block space; fee depends on transaction weight and demand.
Routing fees are often low, but opening and closing channels require on-chain transactions.
Globally visible footprint and limited block capacity.
Liquidity, channel backups, routing and online-operation requirements.
Lightning does not create separate bitcoin. It transfers claims inside channels whose enforceability ultimately depends on Bitcoin transactions and timelocks.