Payment channel

in payment •  4 years ago 

Content

In the Lightning Network, two transactions are required to establish a payment channel, but it is very inefficient to establish a new payment channel every time a transaction is made with different people (takes up a lot of your capital cost + time cost). For example, if A->C conducts a transaction, it can be double-issued to directly create a new payment channel (A->C), but if A->B, B->C has established a channel, then you can use A->B-> C method for trading. That is, you can use existing channels for transactions.

In this way, as more and more payment channels are newly created, eventually, all payment channels will form a huge network. At this time, as long as you have a payment channel with this huge network, you can pass through this huge network. The network conducts transactions with anyone through payment channels.

In order to maintain this huge channel network, it is necessary to incentivize people to contribute their own payment channels, just as miners can get handling fees, if someone uses your payment channel, you can charge a certain fee. Of course, you can also set the fee to a negative value, even if someone uses your payment channel, you can give him a sum of money.

At this point, the Lightning Network was formed.

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