Lightning Network
A Bitcoin payment-channel network that routes off-chain balance updates and settles channel state on-chain.
The Lightning Network is a Layer-2 protocol built from Bitcoin payment channels. Participants lock BTC in on-chain transactions, exchange signed channel-state updates, and can later close on-chain.
Multi-hop payments use conditional transfers so intermediate nodes can forward value without taking custody of the completed payment. Success depends on outbound and inbound liquidity, routing policy, fees, timelocks, and nodes remaining reachable.
Users or service providers must manage channel backups, liquidity, force-close delays, fee reserves, and monitoring for old-state broadcasts. Custodial Lightning wallets hide much of this work by taking custody; self-custodial wallets retain more responsibility.
Lightning can provide fast repeated payments without placing every update in a block. It adds routing, liquidity, availability, implementation, and channel-management risks, so its throughput and trust boundary should be measured separately from Bitcoin Layer 1.
Related terms
Explore connected entries beyond the alphabetical index.
Payment Channel
→A protocol that locks funds on-chain while participants exchange authorized balance updates off-chain before final settlement.
Layer-2
→A protocol built around a Layer-1 to move activity off the base chain while relying on it for settlement or security.
Timelock
→A spending rule that prevents a transaction or output from being used until a specified time or block height.
Hash Time-Locked Contract (HTLC)
→A conditional payment that can be claimed with a secret before a deadline or refunded after the deadline.
Bitcoin (BTC)
→The first widely adopted cryptocurrency, using proof of work and an issuance schedule capped near 21 million BTC under current rules.