# Payment channel

Source URL: https://help.blockstream.com/education/glossary/payment-channel
Updated: 2026-05-26T17:14:36.000Z
Letter: P

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Multisignature contracts between peers that enable instant, 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](https://support.dxp-staging.blockstream.com/education/glossary/lightning-network), with each channel representing a UTXO on the Bitcoin mainchain. These channels can remain open indefinitely as long as the two peers in the channel continue to cooperate, allowing unlimited transactions.

![](https://storage.googleapis.com/dxp-staging-assets/content/glossary/payment-channel.png)

Navigation: Blockstream Help Center > Education > Glossary > Payment channel

## Related Terms in This Letter
- [Payment channel](https://help.blockstream.com/education/glossary/payment-channel) (current)
- [Proof-of-Work (PoW)](https://help.blockstream.com/education/glossary/proof-of-work)
- [Pedersen commitments](https://help.blockstream.com/education/glossary/pedersen-commitments)
- [Peer-to-Peer (P2P) Network](https://help.blockstream.com/education/glossary/peer-to-peer-p2p-network)