THE LIGHTNING NETWORK

WHY IT EXISTS

A block has room for about one megabyte of payments, and one turns up every ten minutes. That is a few thousand payments for the entire world, every ten minutes.

That is not a bug. It is the price of every machine on earth being able to keep the whole record on an ordinary hard drive. Make blocks huge and only large operations can keep up, which is the one thing the design was built to avoid.

So Bitcoin is very good at settling and very bad at buying coffee. Waiting ten minutes and paying a fee to hand over two dollars is silly, and everybody can see that it is silly.

Lightning changes none of that. It sits on top and asks a smaller question: if two people are going to pay each other twenty times, does the whole world need to hear about all twenty?

A CHANNEL, WHICH IS THE WHOLE IDEA

Two people put some bitcoin into a shared lock. That takes one ordinary payment on the chain, and everybody sees it. That lock is a channel.

The lock has one rule: it only opens with both signatures.

Now they can pay each other. A payment is just a new signed note saying how the money in the lock is split. Sixty forty. Then fifty five forty five. Then eighty twenty. Each side keeps the latest note. Nothing is broadcast, nothing is mined, nothing is written down anywhere in the world. It costs nothing and it takes a fraction of a second.

When they are done, one of them puts the last agreed split on the chain and the lock opens. Two payments on the chain in total, however many times they paid each other in between.

The clever part is what stops cheating. If one of them publishes an old note, because an old split was better for them, the other has a window to prove it is old and take the entire lock. Cheating does not just fail. It costs you everything you had in there.

HOW YOU PAY SOMEONE YOU HAVE NO CHANNEL WITH

This is the part people miss, and it is the reason the word network is in the name.

You do not need a channel with the person you are paying. You need a path to them. If you have a channel with A, and A has one with B, and B has one with the shop, your payment can hop along that path.

That is what the numbers at the top of this page are: tens of thousands of channels between thousands of machines, which is a lot of paths.

Nobody along the path can run off with the money. The payment is locked to a secret that only the person being paid knows. Each hop only gets paid if the next one does, so either the whole path completes or none of it does. There is no half paid state where your money is stuck with a stranger.

Each hop takes a small fee for the trouble. Small here means a fraction of a penny, not a percentage.

WHAT IT COSTS YOU, HONESTLY

Nothing is free, so here is the list.

Opening a channel and closing it are ordinary payments on the chain, with ordinary fees. Right now the chain is asking about 1.0 sats per byte. If you are only ever going to pay for one coffee, Lightning costs you more than it saves.

Money in a channel is money sitting there. It is still yours, it simply cannot be spent anywhere else while the channel is open.

You can only receive what the other end of your channels is able to send. A channel you just opened can pay out and cannot take anything in, until some of it has moved. This surprises everybody the first time.

And somebody has to be watching. If the other end publishes an old split while you are offline for a long time, the window to object can pass. Wallets handle this for you, or pay somebody to watch. It is not free, it is just usually invisible.

WHAT IT IS NOT

Lightning is not a second coin, and there is no Lightning token to buy. What moves is bitcoin.

It is not a company. Nobody runs it, the same as the layer underneath it.

It is not on the blockchain, and that is the entire point. A Lightning payment is not a Bitcoin transaction. It is a signed promise about one, and it only becomes a transaction the day the channel closes.

It is not part of Bitcoin either. It was published in 2015, six years after the chain started, by people who had nothing to do with the original design.

And the figures on this page are a floor, not a total. A channel is only counted if it is announced, and plenty of channels are private on purpose. Nobody knows the real size of this network, exactly like the machine count on the chain below it.

QUESTIONS

SEE IT RUNNING

There is a Lightning stop on the tour, and the wall on this site is paid for over Lightning. One satoshi a square, settled in a second, which is the shortest demonstration there is.

Go to the Lightning stop ›

WHAT TO READ NEXT

• PAY YOUR FIRST INVOICEfour steps, for somebody who never has
• MEMPOOLthe queue and the fees Lightning is built to avoid
• WALLETthe signatures both ends of a channel are made of