A Lightning channel can be thought of as a string of beads stretched between two people. Referring to Fig. 1, Alice can pay Bob by pushing one of her beads to his side. If Bob also has a Lightning channel with Carol, Alice can pay Carol through Bob: she pushes a bead over to Bob, who then pushes a bead over to Carol. The fundamental rule — and the reason behind the Lightning Network’s liquidity problems — is that the beads can move from side to side but cannot leave the string they’re on.

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Fig. 1. Alice can send a payment to Carol by routing it through Bob. Because beads cannot leave the string they are on, Bob ends up with one more bead on his string with Alice, and one fewer bead on his string with Carol.

That’s all you need to know to understand the way money can flow in the Lightning Network. But this model doesn’t tell us anything about why Lightning payments are secure. For example, what is stopping Bob from simply keeping the bead Alice pushed towards him and never sending one on to Carol? The purpose of this article is to answer the question “what makes Lightning payments ‘trustless’?” …

About

Peter R. Rizun

Bitcoin Unlimited, Chief Scientist

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