Current state: Slow and costly Bitcoin transactions
Normal bitcoin transactions need to be broadcasted in the mempool. After that they need to be mined. This means a miner has to find the transaction in the mempool and include it in his block.
The miner can only include a certain number of transactions due to the maximum block size being limited to 1MB.
This means he is naturally incentivised to include the transactions with the highest transaction fees only as these fees are accredited to him once he finds the valid block.
The current situation is that users that want to send transactions have to compete with each other about who will pay the highest fee.
If the fee is too low, then the transaction will not go through and will hang in the mempool for ever. This happened to a friend of mine before. He did not know how to fix the problem and his BTC were stuck there for over one month because he did not know how to fix it.
The average transaction fee reached up to 55$ per transaction on December 26th according to bitinfocharts.com which makes Bitcoin unfeasible as a online payment tool in its current state.
Steam for example has stopped to accept Bitcoin payments in December 2017 due to ridiculously high fees.
On top of this each transaction that is included in a block needs to have multiple block confirmations to be seen as valid by most of the users, as they do not want to become a victim of double spend attacks. 3 Block confirmations are the standard, which means that a bitcoin transaction will take usually 30 to 40 minutes which is undesireably as well.
Bitcoin transactions in its current state are too slow and expensive and the network is overloaded .
With the implementation of SegWit in 2017 the path for Lightning network was paved.
Lightning Network
The aim of the Lightning Network is to make transactions almost as fast as instant and to have low transaction fees to tackle the scaling issue of Bitcoin and drive forward mass adoption.
With Lightning Network transactions are handled offchain. Bitcoin is deposited in a payment chanel between two users. This deposit is the opening of the payment chanel and has to be recorded in the blockchain. After that they can transfer Bitcoin to each other as long as they want and as many times as they want with very low fee. The payment chanel can stay open indefinitely. When they are done the chanel can be closed now writing the final balances of each user into the blockchain. The users of the network do not have to be connected to each other directly, an indirect connection is sufficient. This means that if Allice and Bob have an open payment channel and Bob also has an open payment chanel with Charly, Alice can send BTC to Charly without having a direct open payment chanel with him.
Trying out the Lightning Network in Bitcoin Testnet
I recently saw this post from kingscrown that shows you how to try out the Lightning Network in Bitcoin Testnet using Android Eclair Wallet Testnet and it worked realy fast.
After downloading the Testnet wallet you first need to get Testnet Bitcoin by entering your BTC Address from the Eclair testnet wallet here or from a smillar site. After you got your Testnet Bitcoin you will need to connect to a node, preferably one with many connections, and deposit BTC into a payment chanel from this list. After your payment channel is confirmed, you can purchase a fictive coffee from Starblocks and pay via Lightning Network.