The Bitcoin Lightning Network

The Bitcoin Lightning Network :Scalable Off-Chain Instant PaymentsJoseph 14, 2016 DRAFT Version Bitcoin protocol can encompass the global financial transac-tion volume in all electronic payment systems today, without a singlecustodial third party holding funds or requiring participants to haveanything more than a computer using a broadband connection. Adecentralized system is proposed whereby transactions are sent overa Network of micropayment channels ( payment channels ortransaction channels) whose transfer of value occurs Bitcoin transactions can be signed with a new sighash type thataddresses malleability, these transfers may occur between untrustedparties along the transfer route by contracts which, in the event of un-cooperative or hostile participants, are enforceable via broadcast overthe Bitcoin blockchain in the event of uncooperative or hostile partici-pants, through a series of decrementing The Bitcoin Blockchain Scalability ProblemThe Bitcoin [1] blockchain holds great promise for distributed ledgers, butthe blockchain as a payment platform, by itself, cannot cover the world scommerce anytime in the near future.

The payment network Visa achieved 47,000 peak transactions per sec-ond (tps) on its network during the 2013 holidays[2], and currently averages hundreds of millions per day. Currently, Bitcoin supports less than 7 trans-actions per second with a 1 megabyte block limit. If we use an average of 300

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