Multisignature contracts between peers that enable fast, low-fee transactions off-chain. When the participants decide to close a channel, the final balance is then settled on the Bitcoin mainchain in a single transaction.
These peer-to-peer payment channels are the primary building block of the Lightning Network, with each channel representing a UTXO on the Bitcoin mainchain. These channels can remain open indefinitely, and either peer can close the channel unilaterally at any time without needing the other's cooperation, allowing many low-fee transactions off-chain within the channel's capacity.
