Lightning Network

A second layer on/off-chain scaling solution for Bitcoin, Litecoin and other POW cryptocurrencies. It works by opening payment channels between the intended sender and recipient. Using a multisignature wallet, with predetermined conditions for return, coins can be placed into a multisig escrow that is only released when it is signed by both sender and recipient’s set of private/public keys. The multi signature wallet signatures and balances can all be routed through nodes of chain. Current blockchains are slow because the record of transactions needs to propagate to every node in the network. The lightning network solution was to not add the payment to the chain until the payment channel is closed. When the payment channel is closed, all transactions are published to the blockchain as a single transaction representing the new state of the ledger. This is similar to conventional banking and contracting. It’s a contract for future payment. Cryptography and the infrastructure of the Bitcoin network make it possible for merchants and individuals to confidently honour the value locked in multi signature wallets.