The Lightning Network is the probably most highly anticipated technological innovation to be deployed on top of Bitcoin. The payment layer, first proposed by Joseph Poon and Tadge Dryja about a year ago, promises to support a virtually unlimited number of off-chain transactions among users, at nearly no cost – while leveraging the security offered by Bitcoin.
At least three companies – Poon and Dryja’s Lightning, Blockstream and Blockchain – are currently working on implementations of the technology. But few outside this small technological frontline fully grasp how the “future of micropayments” is set to boost Bitcoin’s capabilities.
In this three-part series, Bitcoin Magazine lays out the basic building blocks of the Lightning Network, and shows how they fit together to realize this upcoming protocol layer.
The first part of this series covered basic building blocks, and explained how these are used to establish bidirectional payment channels. This second part explains how bidirectional payment channels are turned into a network.
In the previous article, Alice and Bob established a bidirectional payment channel. Now, Alice wants to pay one bitcoin to a third person, Carol.
To do so, Alice and Carol could open up a payment channel between them. But they don’t actually need to.