<p>Think of the blockchain as a court of law. A perfectly fair and incorruptible court which - if presented with a dispute - always rules justly.</p>
<p>However, like real-world courts, it has high operational costs. Those do not have enough judges and juries to adjudicate every dispute anyone could ever encounter. Thankfully, it doesn't need to. The fact that anyone who has been harmed has the ability to go to court on itself is a deterrent against crime. <em>The primary benefit of the court is incentivizing people to behave honestly</em>.</p>
<p>Lightning, in a way, is applying this principle to Bitcoin. The blockchain (court) has limited capacity, but there is really no need for it to adjudicate every transaction. Here is how it works at a very high level:</p>
<ul>
<li>Two participants, Alice and Bob, create a &quot;channel&quot;: it involves one or both of them putting up some money (on chain!) in a joint address that can only be spent from when they both agree, but with some extra tricks attached (see below).</li>
<li>Once that transaction is confirmed on chain, they can transact with each other by simply updating their idea of how much both of them own. Every time they do this, they hand the receiving party a proof, which will become useful later. This is instant, and very efficient, because it doesn't require telling the whole world.</li>
<li>Multiple such channels can be linked: Bob can connect to Carol as well, and now Alice can instantly pay Carol - by going through Bob as long as that side of the channels has sufficient funds. This is why Lightning is called a <em>network</em>. It is a network <em>of channels</em>.</li>
<li>If one party tries to renege on an update, the harmed party can take the proof they received earlier, and <em>take it to chain</em>. This proof allows them to receive the entire bond put up by the infringing party as reward, and punish the infringing party.</li>
<li>At some point, one or both users want to use the funds locked up in the channel for non-Lightning payments. To do so, they propose closing the channel, and most likely both just sign off and go their merry way. If one party refuses, the other can still take their money again by providing proof on-chain, though with a delay.</li>
</ul>
<p>So yes, Lightning does indeed result in transactions &quot;not happening on chain&quot;. But it's not like they're moved elsewhere - they're just replaced with privately settling between the participants, but still using the chain to go back to whenever a party cheats.</p>

CC BY-SA 4.0
2021-05-03T08:33:45.943Z
just to elaborate on these thoughts. In a real world you can have a contract with someone in order to buy something. Only if one party thinks the other does not fulfill the contract you would go to a court. of course already today you could ask a court or notary every time you want to economically transact with someone but that is and would be slow. Similarly to Lightning and bitcoin. You can do economic bitcoin transactions on chain. but the faster and cheaper way is to do it via lightning network
Rene Pickhardt
CC BY-SA 4.0
2021-05-03T07:35:02.367Z
2021-05-03T23:10:20.567Z
2021-05-03T23:10:20.567Z
Pieter Wuille
<p>Currently Bitcoin transactions can take around 45 minutes. If everyone in the world uses Bitcoin, computers would have to consume 1000 of terabytes per Hour.</p>
<p>The solution is the Lightning network,  which takes transactions Off the Blockchain and groups many transactions into one.</p>
<p>a) However would taking transactions off the blockchain temporarily, defeat the whole purpose of having ledger transaction?</p>
<p>b) Additionally, can Lightning Network know who owns how many bitcoins with multi transactions off the ledger?</p>

CC BY-SA 4.0
2021-05-03T03:47:19.443Z
It is impossible to answer your question as your assumptions are inaccurate and false. They are not off the ledger. Lightning funds are simply funds locked within an updating time-locked P2SH. It doesn't appear you've done any research into how lightning actually works.
m1xolyd1an
CC BY-SA 4.0
2021-05-03T04:07:55.807Z
hi @m1xolyd1an I saw this article here when reading, https://www.investopedia.com/tech/bitcoin-lightning-network-problems/ " Bitcoin's Lightning Network (LN) is a second layer added to Bitcoin's network enabling transactions to be done between parties off of the blockchain—called off-chain transactions."  This is what I read as a beginner, feel free to contact the author, also chill out in your language, you're in San Diego, like me, have a great day,
mattsmith5
CC BY-SA 4.0
2021-05-03T04:10:42.423Z
why is this question voted down in general? trying to learn, I think if assumptions of question is wrong, it needs to be addressed,  I'm seeing lot of resources like this stating lightning network is off transaction ledgers , https://medium.com/novamining/introduction-on-lightning-networks-and-off-chain-transactions-75bda590a84e
mattsmith5
<bitcoin-core><blockchain><lightning-network>
If Lightning Network takes transactions off Blockchain, would that defeat the whole purpose of having a Blockchain ledger?
mattsmith5
# If Lightning Network takes transactions off Blockchain, would that defeat the whole purpose of having a Blockchain ledger?

(Asked by: username_0 on 2021-05-03)

Currently Bitcoin transactions can take around 45 minutes. If everyone in the world uses Bitcoin, computers would have to consume 1000 of terabytes per Hour.

The solution is the Lightning network, which takes transactions Off the Blockchain and groups many transactions into one.

a) However would taking transactions off the blockchain temporarily, defeat the whole purpose of having ledger transaction?

b) Additionally, can Lightning Network know who owns how many bitcoins with multi transactions off the ledger?

**Tags:** bitcoin-core, blockchain, lightning-network

> **Comments:**
> **username_1**: It is impossible to answer your question as your assumptions are inaccurate and false. They are not off the ledger. Lightning funds are simply funds locked within an updating time-locked P2SH. It doesn't appear you've done any research into how lightning actually works.  
> **username_0**: hi @username_1 I saw this article here when reading, https://www.investopedia.com/tech/bitcoin-lightning-network-problems/ " Bitcoin's Lightning Network (LN) is a second layer added to Bitcoin's network enabling transactions to be done between parties off of the blockchain—called off-chain transactions."  This is what I read as a beginner, feel free to contact the author, also chill out in your language, you're in San Diego, like me, have a great day,  
> **username_0**: why is this question voted down in general? trying to learn, I think if assumptions of question is wrong, it needs to be addressed,  I'm seeing lot of resources like this stating lightning network is off transaction ledgers , https://medium.com/novamining/introduction-on-lightning-networks-and-off-chain-transactions-75bda590a84e  

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## 1 answers

### Answer by username_2 on 2021-05-03. Score: 5 | Accepted answer

Think of the blockchain as a court of law. A perfectly fair and incorruptible court which - if presented with a dispute - always rules justly.

However, like real-world courts, it has high operational costs. Those do not have enough judges and juries to adjudicate every dispute anyone could ever encounter. Thankfully, it doesn't need to. The fact that anyone who has been harmed has the ability to go to court on itself is a deterrent against crime. *The primary benefit of the court is incentivizing people to behave honestly*.

Lightning, in a way, is applying this principle to Bitcoin. The blockchain (court) has limited capacity, but there is really no need for it to adjudicate every transaction. Here is how it works at a very high level:

* Two participants, Alice and Bob, create a "channel": it involves one or both of them putting up some money (on chain!) in a joint address that can only be spent from when they both agree, but with some extra tricks attached (see below).
* Once that transaction is confirmed on chain, they can transact with each other by simply updating their idea of how much both of them own. Every time they do this, they hand the receiving party a proof, which will become useful later. This is instant, and very efficient, because it doesn't require telling the whole world.
* Multiple such channels can be linked: Bob can connect to Carol as well, and now Alice can instantly pay Carol - by going through Bob as long as that side of the channels has sufficient funds. This is why Lightning is called a *network*. It is a network *of channels*.
* If one party tries to renege on an update, the harmed party can take the proof they received earlier, and *take it to chain*. This proof allows them to receive the entire bond put up by the infringing party as reward, and punish the infringing party.
* At some point, one or both users want to use the funds locked up in the channel for non-Lightning payments. To do so, they propose closing the channel, and most likely both just sign off and go their merry way. If one party refuses, the other can still take their money again by providing proof on-chain, though with a delay.

So yes, Lightning does indeed result in transactions "not happening on chain". But it's not like they're moved elsewhere - they're just replaced with privately settling between the participants, but still using the chain to go back to whenever a party cheats.

> **Comments:**
> **username_3**: just to elaborate on these thoughts. In a real world you can have a contract with someone in order to buy something. Only if one party thinks the other does not fulfill the contract you would go to a court. of course already today you could ask a court or notary every time you want to economically transact with someone but that is and would be slow. Similarly to Lightning and bitcoin. You can do economic bitcoin transactions on chain. but the faster and cheaper way is to do it via lightning network  

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