The Lightning Network
Lightning uses payment channels to move many small Bitcoin payments off-chain while preserving on-chain settlement rights.
Lightning is Bitcoin's major layer-2 scaling system for fast and low-fee payments.
The Intuition
Two users lock funds into a channel, update balances privately, and settle on-chain later. Multihop routing allows users without a direct channel to pay through intermediaries.
See it concretely
Instead of recording every coffee purchase in court, you open a tab and settle the final balance later.
Tempting — but wrong
The precise version
A Lightning channel is funded by an on-chain output. Participants exchange signed commitment transactions that represent the current balance. Revocation mechanisms punish attempts to publish old states. HTLCs use hashlocks and timelocks to support conditional routed payments. Channel liquidity is directional, so routing depends on available balances along the path.
payment succeeds \iff hash(preimage)=H \land timelocks\ remain\ safeCheck your understanding
Why does Lightning use revocation?
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Why does liquidity direction matter?
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- Explain channel opening and closing.
- Explain commitment transactions.
- Explain HTLCs.
- Describe liquidity and routing constraints.
What is Lightning's main scaling idea?