State Channels For Dummies: Part 1

Payment Channels

Eric Olszewski
Jul 23, 2018 · 5 min read
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I was adamant about having this image — no way to make it non-intrusive. Oh, well.

Payment Channels

So, payment channels have been discussed for some time now and a great reference can be found in the Bitcoin Lightning Network Whitepaper on how exactly these work.

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An example of a real-world payment channel
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Alice attempting to submit older transaction
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Bob submitting the newest transaction
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Contract pays out after challenge period expires
  • ‘Instant Finality’ — Alice and Bob can sign and exchange messages instantaneously without having to wait for confirmation from the chain — leading to a much better user-experience.
  • Lower Cost — Alice and Bob are able to exchange ETH freely with the only on-chain transactions being for creating the channel and settling / closing the channel.

Part 2: App-Specific State Channels

In my next post, I’m going to be delving into App-Specific State Channels.

Further Reading

If you’d like to learn more about Counterfactual, here are a few resources for you to check out:

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Eric Olszewski

Written by

Always Learning.

BlockChannel

BlockChannel is a new media & educational hub focused on the socio-cultural/economic issues related to blockchain technologies like BTC/ETH/& HNS. Visit BlockChannel.com for more resources; and SoundCloud.com/BlockChannelShow for our official podcast.

Eric Olszewski

Written by

Always Learning.

BlockChannel

BlockChannel is a new media & educational hub focused on the socio-cultural/economic issues related to blockchain technologies like BTC/ETH/& HNS. Visit BlockChannel.com for more resources; and SoundCloud.com/BlockChannelShow for our official podcast.

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