<blockquote>
<p>So in the first step you make a regular transaction from your address A to our common 2-2 address C, and I make a regular transaction from my address B to our common 2-2 address C?</p>
</blockquote>
<p>Yes, although in the current lightning spec and implementation, only one party funds the channel. However it could certainly be both parties that fund it.</p>
<blockquote>
<p>I have one key of this 2-2 multisig address C and you have another?</p>
</blockquote>
<p>Yes.</p>
<blockquote>
<p>Address C now has 1BTC.</p>
<p>Now from this address C I return 0.5 of its 1 BTC to your address A and sign with my key, and you return remaining 0.5 to my address B and sign with your key?</p>
</blockquote>
<p>Two transactions are formed at this point:</p>
<ul>
<li><p>one that you make and sign and send to me that gives 0.5 BTC to you and 0.5 BTC to me,</p>
</li>
<li><p>one that I make and sign and send to you that also gives 0.5 BTC to you and 0.5 BTC to me.</p>
</li>
</ul>

CC BY-SA 3.0
2017-11-15T15:43:08.557Z
Regarding third part. I know that both must sign to be valid. I'm interested if in the second step we use the address C (we put funds in step one) to return funds?
croraf
CC BY-SA 3.0
2017-11-15T15:55:05.073Z
Yes, address C is the one that is spent from to return funds.
Ava Chow
CC BY-SA 3.0
2017-11-15T16:01:54.273Z
Also in the third part, the transaction I make from 2-2 address has two outputs (0.5 to me and 0.5 to you), or just one output that sends 0.5BTC to you?
croraf
CC BY-SA 3.0
2017-11-15T16:34:11.223Z
It is two outputs
Ava Chow
CC BY-SA 3.0
2017-11-15T19:36:43.723Z
And the transaction you make from 2-2 address has also two outputs 0.5 to me and 0.5 to you? Thus only one of these transactions can be fullfiled, as each spends entire funds from address C?
croraf
CC BY-SA 3.0
2017-11-15T20:02:06.020Z
No. Address C has 1 BTC, and the transaction spends that 1 BTC and sends 0.5 to me and 0.5 to you.
Ava Chow
CC BY-SA 3.0
2017-11-15T20:12:43.390Z
https://chat.stackexchange.com/rooms/68778/room-for-croraf-and-andrew-chow
croraf
CC BY-SA 3.0
2017-11-15T15:20:00.910Z
2017-11-16T03:59:32.543Z
2020-06-16T11:10:03.350Z
Ava Chow
<p>I'm checking <a href="https://bitcoin.stackexchange.com/questions/43700/how-does-the-lightning-network-work-in-simple-terms">How does the Lightning network work in simple terms?</a> answer example:</p>

<blockquote>
  <p>1) Putting funds into Lightning  We both send 0.5 BTC into a shared
  2-of-2 multisig address. This requires a transaction on the Bitcoin
  blockchain.  As a "balance sheet", we each create a 2-of-2 multisig
  transaction that pays out 0.5 BTC to you and 0.5 BTC to me. I sign
  one payout transaction and give it to you. If you want to put it in
  effect, you need only add your own signature and broadcast it to the
  Bitcoin network. Vice versa, you give me your copy of the payout
  transaction that you have signed and I have not yet. The "balance
  sheet" is a regular 2-of-2 multisig transaction in the Bitcoin
  network, it just isn't valid yet, because it doesn't have all
  signatures.</p>
</blockquote>

<p>So in the first step you make <strong>a regular transaction</strong> from your address A to our common 2-2 address C, and I make <strong>a regular transaction</strong> from my address B to our common 2-2 address C?</p>

<p>I have one key of this 2-2 multisig address C and you have another?</p>

<p>Address C now has 1BTC.</p>

<p>Now <strong>from this address C</strong> I return 0.5 of its 1 BTC <strong>to your address A</strong> and sign with my key, and you return remaining 0.5 <strong>to my address B</strong> and sign with your key?</p>

<lightning-network><ln-opening-channels>
Clarification of lightning network example (putting funds into lightning)
croraf
# Clarification of lightning network example (putting funds into lightning)

(Asked by: username_0 on 2017-11-15)

I'm checking [How does the Lightning network work in simple terms?](https://bitcoin.stackexchange.com/questions/43700/how-does-the-lightning-network-work-in-simple-terms) answer example:

> 1) Putting funds into Lightning We both send 0.5 BTC into a shared
> 2-of-2 multisig address. This requires a transaction on the Bitcoin
> blockchain. As a "balance sheet", we each create a 2-of-2 multisig
> transaction that pays out 0.5 BTC to you and 0.5 BTC to me. I sign
> one payout transaction and give it to you. If you want to put it in
> effect, you need only add your own signature and broadcast it to the
> Bitcoin network. Vice versa, you give me your copy of the payout
> transaction that you have signed and I have not yet. The "balance
> sheet" is a regular 2-of-2 multisig transaction in the Bitcoin
> network, it just isn't valid yet, because it doesn't have all
> signatures.

So in the first step you make **a regular transaction** from your address A to our common 2-2 address C, and I make **a regular transaction** from my address B to our common 2-2 address C?

I have one key of this 2-2 multisig address C and you have another?

Address C now has 1BTC.

Now **from this address C** I return 0.5 of its 1 BTC **to your address A** and sign with my key, and you return remaining 0.5 **to my address B** and sign with your key?

**Tags:** lightning-network, ln-opening-channels


---

## 1 answers

### Answer by username_1 on 2017-11-15. Score: 2 | Accepted answer

> So in the first step you make a regular transaction from your address A to our common 2-2 address C, and I make a regular transaction from my address B to our common 2-2 address C?

Yes, although in the current lightning spec and implementation, only one party funds the channel. However it could certainly be both parties that fund it.

> I have one key of this 2-2 multisig address C and you have another?

Yes.

> Address C now has 1BTC.
>
> Now from this address C I return 0.5 of its 1 BTC to your address A and sign with my key, and you return remaining 0.5 to my address B and sign with your key?

Two transactions are formed at this point:

* one that you make and sign and send to me that gives 0.5 BTC to you and 0.5 BTC to me,
* one that I make and sign and send to you that also gives 0.5 BTC to you and 0.5 BTC to me.

> **Comments:**
> **username_0**: Regarding third part. I know that both must sign to be valid. I'm interested if in the second step we use the address C (we put funds in step one) to return funds?  
> **username_1**: Yes, address C is the one that is spent from to return funds.  
> **username_0**: Also in the third part, the transaction I make from 2-2 address has two outputs (0.5 to me and 0.5 to you), or just one output that sends 0.5BTC to you?  
> **username_1**: It is two outputs  
> **username_0**: And the transaction you make from 2-2 address has also two outputs 0.5 to me and 0.5 to you? Thus only one of these transactions can be fullfiled, as each spends entire funds from address C?  
> **username_1**: No. Address C has 1 BTC, and the transaction spends that 1 BTC and sends 0.5 to me and 0.5 to you.  
> **username_0**: https://chat.stackexchange.com/rooms/68778/room-for-username_0-and-andrew-username_1  

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