Lightning Network

A second layer for fast, cheap payments that settles to the bitcoin blockchain.

Opening a channel is one on-chain transaction to a 2-of-2 Multisig output. After that the two parties exchange signed updates that re-split the balance; only the latest one counts, and publishing an old one can be punished. Closing the channel settles the final balance on-chain.

Payments across several channels use hash time-locked contracts (HTLCs): each hop can only claim its money by revealing the same secret, so the payment either completes end to end or fails. Invoices (BOLT11), offers (BOLT12), LNURL and Lightning Addresses are ways to request money.

All follow the BOLT specifications: LND (Lightning Labs), Core Lightning (Blockstream), Eclair (ACINQ) and LDK (Spiral). Wallets range from self-custodial (for example Phoenix, Breez, Zeus) to custodial apps where a company holds the funds.

You need inbound liquidity to receive, your node must be online (or watched by a watchtower) to stay safe, and large payments can fail to find a route. Public capacity counts only announced channels; private channels are invisible, so the real network is bigger.