Opening and Closing Channels

Opening a Lightning channel is an on-chain transaction that creates a funding output for two participants. Once that channel is open, the wallets can exchange thousands of off-chain updates without touching the blockchain again. This setup allows Lightning to scale to millions of payments per second across the network.

Closing a channel is another on-chain transaction that settles the final balances. It acts as the ultimate fallback—if anything goes wrong, the blockchain enforces the correct outcome. This safety mechanism is what makes Lightning trust-minimized: you don’t rely on the other party, only on Bitcoin’s base layer.

Most modern Lightning wallets automate channel management so users don’t have to think about liquidity, routing, or technical details. Under the hood, though, channels are what give Lightning its speed and scalability—and understanding them helps explain why Lightning is both incredibly fast and deeply secure.