Lightning Channels

Definition ∞ Lightning Channels are private, off-chain payment channels used to conduct faster and cheaper Bitcoin transactions. These channels allow two parties to make multiple transactions with each other without recording every single one on the main Bitcoin blockchain. Only the opening and closing transactions of the channel are broadcast to the network. This Layer 2 technology significantly boosts transaction speed and reduces fees, addressing Bitcoin’s scalability limitations.
Context ∞ Lightning Channels are central to the ongoing discussion about Bitcoin’s utility for micro-transactions and everyday payments, particularly in regions with high inflation. Adoption rates and network capacity are frequently reported metrics indicating its growth and effectiveness. Further development aims to enhance user experience and improve routing capabilities across the network.