Faster, cheaper settlement.
WHAT A PAYMENT CHANNEL IS
Two parties locking funds, then transacting between themselves privately, settling the net result on the network.
WHAT IT PROVIDES
Instant transfers Negligible fees Privacy of individual payments
WHAT A NETWORK OF CHANNELS PROVIDES
Payment to parties you have no direct channel with, routed through others.
WHAT IT REQUIRES
Liquidity along the route.
WHAT THAT MEANS PRACTICALLY
Payments can fail if no route with sufficient capacity exists.
WHAT CHANNEL MANAGEMENT INVOLVES
Opening and closing channels, which cost on-chain fees Balancing liquidity
WHAT NODES MUST DO
Remain online, to respond to attempts to close a channel dishonestly.
WHAT WATCHTOWERS PROVIDE
Monitoring on your behalf, when offline.
WHAT THE SUITABILITY IS
Small frequent payments, where on-chain fees would be prohibitive.
WHAT IT SUITS LESS
Large infrequent transfers Receiving without prior liquidity
WHAT CUSTODIAL WALLETS ON SUCH NETWORKS PROVIDE
Simplicity, at the cost of custody.
WHAT TO UNDERSTAND
That much apparent adoption is custodial, which reintroduces the intermediary.
WHAT TO ASSESS
Whether the complexity is justified by your use.
