Locktime is a parameter in a Bitcoin transaction that specifies the earliest time or earliest block height at which the transaction can be added to the blockchain. It's a mechanism that allows users to post-date transactions, making them spendable only after a certain time or block height is reached.
"A transaction with a locktime set to block number 700,000 will remain unconfirmed until the Bitcoin blockchain reaches that block height."
Locktime is often used in second layer protocols, where funds are locked up for a certain period. It encourages cooperation among participants by imposing penalties on bad actors through complex locktime contracts.
"In the Lightning Network, a type of second layer protocol, locktime is used in Hashed Timelock Contracts (HTLCs) to ensure that all parties cooperate during the routing of payments."
Locktime can also be used to put money in escrow until a specified time or condition is met. This ensures that the funds cannot be moved until an agreed-upon time, or they can be released if a pending multi-signature contract isn't fulfilled within the given time.
"In a trustless exchange between multiple parties, locktime can be used to ensure that if either side fails to fulfill their part of the deal, the respective funds are returned to each party."
* All terms and definitions may update as the Cryptionary improves.
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