Channel

A two-party Lightning payment connection. Open it once, exchange thousands of payments off-chain, close it when done.

A Lightning channel is a payment relationship between two parties on the Bitcoin Lightning Network. Opening a channel involves one on-chain transaction that locks some Bitcoin into a 2-of-2 multisig. Once open, the two parties can exchange payments back and forth instantly, off-chain, as many times as they want.

When either party wants to settle, they close the channel — another on-chain transaction that distributes the final balance to each side. The genius is that thousands of off-chain payments cost only two on-chain transactions. The fee per payment becomes microscopic.

You don't need a direct channel to every person you pay. Lightning routes payments through chains of channels. If A has a channel to B and B has a channel to C, A can pay C through B. Multiply this by hundreds of thousands of nodes and you get a network where most people can reach most other people in a few hops.

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Lightning Network

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Related terms

Glossary

Lightning Network

A second-layer Bitcoin payment network that enables instant, low-fee transactions.

Glossary

Channel close

Settling a Lightning channel back on the main Bitcoin chain. Cooperative closes are fast and cheap; force closes are expensive.

Glossary

Invoice

A Lightning payment request — a string starting with "lnbc..." that encodes amount, description, and destination.

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