Comment by @harfang • Hey

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

Stats

Comments

When either Fabian or Emma wants to stop they can send the last multisigned transaction to the blockchain to make the final transfer on-chain. Now let’s make the channel trustless, because if Fabian never signs the first transaction Emma’s funds are locked and Emma could take the first transaction only sending 1 BTC, and submit it. This can be solved with timelocks. First, Emma signs both funding and refund transactions but only sends the refund one to Fabian to sign it. Once done the transaction is time-locked for 30 days (example), so if Fabian refused to sign further transactions Emma just needs to wait 30 days for a refund. Once the transaction is mined she can send the funding one. Now Each commitment transaction will be signed with a shorter timelock so the last transaction can be executed before the precedent.