Lightning network

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The Lightning network is off-chain approach for solving Bitcoin scalability issues. It is a proposed implementation of Hashed Timelock Contracts (HTLCs) with bi-directional payment channels (a payment channel where payments can flow both directions, from Alice to Bob and back to Alice) which allows payments to be securely routed across multiple peer-to-peer payment channels. This allows the formation of a network where any peer on the network can pay any other peer even if they don't directly have a channel open between each other.

The main prerequisite for Lightning network was enabling SegWit which solved the malleability issue (BIP141)

Key features of Lightning network are:

  • Rapid payments
  • No third-party trust
  • Reduced blockchain load
  • Channels can stay open indefinitely
  • Rapid cooperative closes
  • Outsourcable enforcement
  • Onion-style routing
  • Securely cross blockchains
  • Multisignature capable
  • Sub-satoshi payments
  • Single-funded channels
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