A Technical Introduction to Bitcoin's 2nd Layer- The Lightning Network

A single on-chain transaction can open a channel for unlimited, instant off-chain payments. Discover the technical magic of Bitcoin's Lightning Network.

#1about 2 minutes

An overview of the Lightning Network protocol

The Lightning Network is a routed payment channel network built on Bitcoin, defined by interoperability standards called BOLTs.

#2about 3 minutes

Understanding the structure of a Bitcoin transaction

Bitcoin transactions consist of inputs that unlock previous funds and outputs that create new spending conditions for future transactions.

#3about 5 minutes

How Bitcoin Script enables programmable money

Bitcoin Script is a stack-based, Turing-incomplete language used to define spending conditions for transactions, enabling simple smart contracts.

#4about 3 minutes

Securing funds with multisignature scripts

Multisignature (multisig) scripts require multiple signatures (K-of-N) to authorize a transaction, enabling joint control over funds.

#5about 2 minutes

Using time locks to control future spending

Time locks are a security primitive that prevents a Bitcoin script from being valid until a specific future time or block height is reached.

#6about 11 minutes

Building a simple unidirectional payment channel

A payment channel is created with an on-chain funding transaction, allowing many off-chain commitment transactions to update balances instantly.

#7about 6 minutes

Creating bidirectional and enforceable payment channels

Bidirectional channels allow payments in both directions and use time locks on asymmetric transactions to prevent parties from broadcasting outdated, more favorable states.

#8about 2 minutes

Introducing Hash Time-Locked Contracts (HTLCs)

A Hash Time-Locked Contract (HTLC) allows funds to be redeemed by revealing a secret (pre-image) before a timeout, or refunded after the timeout.

#9about 10 minutes

Routing payments across the Lightning Network

Payments are routed across multiple interconnected channels using a chain of HTLCs, enabling payments to anyone on the network without a direct channel.