The Lightning Network is a system of payment channels built on Bitcoin. Participants commit funds onchain, exchange signed balance updates offchain, and can later close a channel so the resulting balance is settled through Bitcoin.
A channel records agreed balance updates
Opening a channel creates an onchain transaction. While it remains open, participants can make multiple signed updates without publishing every payment to Bitcoin. Channel capacity and each side’s available balance constrain payment size.
Channel capacity is not all available to one side
A payment can be constrained by local channel balance and routing liquidity even when total channel capacity looks sufficient.
Multi-hop payments require a usable route
Payments can pass through intermediary channels using conditional payments. Routing liquidity, fees, uptime, and channel policies affect whether a payment succeeds; Lightning is not a guarantee of instant or cost-free transfers.
Routing fees and channel policy can change
Intermediaries set policies that affect route cost and availability over time.
Sources
Educational information, not investment advice.