Lightning Network
A Bitcoin Layer-2 payment channel network for fast, low-value payments that settle back to the base chain.
- Also known as
- LN
The Lightning Network is a Layer-2 protocol built around Bitcoin payment channels. Users lock funds in on-chain channel transactions, then exchange signed off-chain updates that can later settle to Bitcoin.
Lightning routes payments across connected channels using hashed timelock contracts and liquidity on each hop. Participants do not need direct channels with every recipient, but the route must have enough inbound and outbound capacity.
Lightning can make small payments fast and inexpensive once channels are funded, but it introduces liquidity management, watchtower or online-monitoring needs, routing failures, channel backup concerns, and on-chain fees for opening and closing channels.
Lightning security depends on valid channel state, penalty or update mechanisms, timelocks, and the ability to respond during dispute windows. Custodial Lightning wallets add separate counterparty risk because the provider controls the channel funds.
Related terms
3 linkedExplore connected entries beyond the alphabetical index.
Hashed Time-Locked Contract (HTLC)
→A contract that locks funds with both a hash condition and a deadline, enabling atomic swaps and routed payments.
Locktime
→A transaction field or script condition that delays when funds can be spent or when a transaction becomes valid.
Layer-2
→A protocol built around a Layer-1 to move activity off the base chain while relying on it for settlement or security.
All terms and definitions may update as the Cryptionary improves.
