Comment by @harfang • Hey

Lightning network is a routed network for Bidirectional payment channels. Because Lightning network involves a lot of technology, on this thread we will se

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For this example let’s say that Emma is purchasing a video streaming service from Fabian at 1 BTC / second. For the moment let’s imagine that no one cheats we will see how to make it trustless after. To set up the payment channel, Emma and Fabian establish a 2-of-2 multi-signature address, with each of them holding one of the keys. From Emma’s perspective, she needs to submit a "deposit" for up to 1 hour of video. Emma’s transaction, paying to the multi-signature address, is the funding or anchor transaction for the payment channel. The initial funding is the channel capacity (3600 BTC in this case) Emma signs a transaction of 1 BTC to Fabian but the transaction is multisig so Fabian when he receives it, signs it and sends it back to Emma. No tx was submitted to the blockchain already. Each second she will sign a new transaction with the seconds she has consumed.