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Patrick Lemke 2020-02-20 17:42:12 +01:00
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@ -16,7 +16,7 @@ We'll start with a one sentence definition of what the Lightning Network (LN) is
**The Lightning Network (LN) is a network of _payment channels_ on top of the _Bitcoin protocol_, as well as a communication protocol that defines how participants set up and execute the smart contracts on the network**
We will see that a payment channel is simply a 2-out-of-2 multisignature address on the Bitcoin Network for which you hold one key and your channel partner holds the other key.
We will see that a payment channel is simply a 2-out-of-2 multisignature address on the Bitcoin network for which you hold one key and your channel partner holds the other key.
This multisignature address comes with a cryptographic protocol that is established by creating a sequence of transactions that spend from this address.
Each new transaction is negotiated between you and your channel partners and are attempts to spend from the multisignature address.
The latest transaction in the sequence encodes the balance of the channel and defines how the funds locked into the multisignature address are to be divided between you and your channel partner.