Lightning Labs introduction
The Lightning Network scales the blockchain and enables trustless instant payments by keeping most transactions off-chain and leveraging the security of the underlying blockchain as an arbitration layer. This is primarily done through "payment channels", where two parties commit funds and pay each other by updating balances in the channel that are redeemable by either party. This process is instant and frees users from having to wait for block confirmations to provide goods or services. Payment channels are considered trustless, as any attempt to defraud the currently agreed-upon balance in the channel will result in the responsible party forfeiting the funds entirely. By moving payments off-chain, the cost of opening and closing a channel (in the form of on-chain transaction fees) is apportioned across the payment volume in that channel, enabling micropayments and microtransactions for on-chain transactions that otherwise would be Too expensive to justify. Furthermore, the Lightning Network scales not with the transaction throughput of the underlying blockchain, but with modern data processing and latency constraints—payments can be made almost as fast as packets of data can be sent. Hashed Timelock Contracts (HTLCs) allow transactions to be routed over multiple hops between parties without direct channels, so anyone connected to the Lightning Network is part of a single, interconnected global financial system. In short, the Lightning Network enables scalable blockchains through massive instant transactions that don't require escrow delegation.
