What is Lightning Network?
A network of payment channels built on Bitcoin that settles small payments off-chain, using the base layer only to open and close channels.
Two parties lock funds in a channel and then update the balance between them by exchanging signed states. Only the opening and closing transactions touch the chain, so payments are near-instant and cost a fraction of a cent.
Lightning changes the cost and speed of payments. It does not change the supply schedule or the base layer's security model, and it introduces its own considerations: channel liquidity, routing, and the need to be online to defend against an old-state broadcast.
Lightning is not a separate coin and not a sidechain. The bitcoin in a channel is real bitcoin, encumbered by a contract.
Related terms
Payment channel
A two-party contract funded by an on-chain transaction, inside which balances can be updated repeatedly…
NetworkSegWit
A 2017 soft fork that moved signature data into a separate witness structure, fixing transaction malleability…
Lightning & scalingRouting (Lightning)
Finding a path of channels with enough liquidity in the right direction to carry a payment from sender to…
Lightning & scalingOn-chain
A transaction recorded in a Bitcoin block, as opposed to one settled off-chain in a channel or inside a…
This definition is part of the Bitcoin Logical glossary. For the fuller explanation, start with Learn, or see the live numbers on The Bitcoin Signal.