You are viewing a single comment's thread from:
RE: Bitcoin's Lightning Network - How Does It Work and How to Test It
"Lightning Network is essentially an agreement between end users to net off the ownership of funds at a later time, thereby deferring what is broadcast to the blockchain." I'm not sure I understood this? So these funds are locked in some kind of holding? So they are available to be used as part of a payment channel. If this information is not on the blockchain how is it stored?
Hi Sweetwilliam,
It's a really good (and interesting) question. Essentially you are correct. The funds are set aside in some form of holding account - similar to the way a checking account is separate from a savings account.
The two parties send one on chain transaction into a "multi-signature address". The balance between the two parties is sorted out at a later date.
A general summary of how this works is found here
The more technical/specific explanation of how it works is here