The Lightning Network (LN) is a payment protocol built on the bitcoin blockchain. It is intended to enable fast transactions among participating nodes (independently run members of the network) and has been proposed as a solution to the bitcoin scalability problem.

Joseph Poon and Thaddeus Dryja published a Lightning Network white paper in February 2015.

Lightning Labs launched the Lightning Network in 2018 with the goal of reducing the cost and time required for cryptocurrency transactions. Specifically, the bitcoin blockchain can only process around 7 transactions per second (compared to Visa Inc., which can process around 24,000 transactions per second). Despite initial enthusiasm for the Lightning Network, reports on social media of failed transactions, security vulnerabilities, and over-complication led to a decline in interest.

The three major Lightning Network implementations are Lightning Network Daemon (LND) by Lightning Labs, Core Lightning (CLN) by Blockstream, and Eclair by ACINQ. A fourth implementation library, Lightning Development Kit (LDK), is maintained by Spiral, a subsidiary of Block, Inc.

Andreas Antonopoulos calls the Lightning Network a second layer routing network. The payment channels allow participants to transfer money to each other without having to make all their transactions public on the blockchain. This is secured by penalizing uncooperative participants. When opening a channel, participants must commit an amount on the blockchain (a funding transaction). Time-based script extensions like CheckSequenceVerify and CheckLockTimeVerify make the penalties possible.

Transacting parties use the Lightning Network by opening a payment channel and transferring (committing) funds to the relevant layer-1 blockchain (e.g. bitcoin) under a smart contract. The parties then make any number of off-chain Lightning Network transactions that update the tentative distribution of the channel's funds, without broadcasting to the blockchain. Whenever the parties have finished their transaction session, they close the payment channel, and the smart contract distributes the committed funds according to the transaction record.

The Lightning Network (LN) operates through bidirectional payment channels between two nodes, forming smart contracts that facilitate off-chain transactions. If either party closes a channel, the final state is settled on the Bitcoin blockchain. While this design enables faster and cheaper transactions, the necessity of on-chain transactions to open and close channels introduces scalability constraints.

To preserve privacy and security, the network employs an onion routing protocol, wherein each node in the path decrypts only enough information to determine the next hop, without knowledge of the payment's origin or final destination.

As of March 2026^([update]), the Lightning Network had over 17,000 public nodes and approximately 40,000 public payment channels, with a total network capacity of around 4,900 BTC.