1. You post funding transaction on block chain (that locks up your money for the channel lifetime)
2. During channel lifetime (it can be a day, a month or even a year) you are free to exchange off-chain transactions with other LN users. Those TX are same BTC TX messages, however they never got posted to blockchain unless dispute occurs (in case of dispute, person who initiates premature channel closure gets punished) or channel naturally expires.
3. After channel closes - second - settlement transaction being posted to blockchain.
I think it's important to note that once the money is depleted in your channel, you will need to refund, which is another on-chain transaction (including the really steep on-chain fees). Every transaction into and out of the payment channel = on chain = huge fees.
One seemingly inescapable effect of the LN is an increased demand for bitcoin. This is because the LN network is essentially a huge distributed "HODLer."
If there are 16 million bitcoins and over six months LN absorbs 2 million, more price and fee increases, hello.
Exactly. Even with LN, the current 7 transactions/sec world wide is a joke, not even close enough to make this a viable solution. It's doomed to fail, unless they improve the onchain throughput rate. But if they do that, why do they need LN in the first place ?