Summary:
A Lightning channel is a private, off-chain connection between two parties that allows them to send and receive bitcoin without touching the blockchain until the channel is closed.
Details:
To open a Lightning channel, two users lock up bitcoin in a multi-signature address. They can then make unlimited transactions between each other off-chain. These transfers update each party’s balance, and the final result is only written to the blockchain when the channel is closed.
Channels can also be part of a larger network—your payment can travel across multiple channels, enabling non-custodial, peer-to-peer payments between people who aren’t directly connected.
Key Features:
- Require an initial on-chain transaction to open.
- Allow infinite, real-time payments until closure.
- Channels are peer-to-peer and non-custodial.
- Closing the channel settles the final balance on-chain.
- Channels can be routed to third parties across the network.