<p>The ledger entry is indeed a single multisig 2-of-2 transaction that is included in a block. </p>

<p>Then, both parties create a 1-of-2 multisig transaction that is not yet published to the network, but kept in reserve. This transaction is updated every time you make a transaction between both parties. Once either of the parties decides to close the channel, he or she publishes their second transaction and it is included in the blockchain.</p>

CC BY-SA 3.0
2017-11-15T11:02:09.627Z
2017-11-15T11:02:09.627Z
BlackBeltBob
<p>I'm checking <a href="https://lightning.network/" rel="nofollow noreferrer">https://lightning.network/</a> and first paragraph of explanation says:</p>

<blockquote>
  <p>Bidirectional Payment Channels. Two participants create a ledger entry
  on the blockchain which requires both participants to sign off on any
  spending of funds. </p>
</blockquote>

<p>What does this step mean. 
Is this ledger entry a transaction?
Is this ledger entry actually one broadcasted multisig transaction signed by both parties that ends on the blockchain?
Or two parties broadcast two multisig transactions, or two regular transactions?
Can you give a numerical example?</p>

<blockquote>
  <p>Both parties create transactions which refund the
  ledger entry to their individual allocation, but do not broadcast them
  to the blockchain. </p>
</blockquote>

<p>After the first step above then each party crate a regular transaction to refund what? (Can you continue on numerical example above)</p>

<blockquote>
  <p>They can update their individual allocations for
  the ledger entry by creating many transactions spending from the
  current ledger entry output. Only the most recent version is valid,
  which is enforced by blockchain-parsable smart-contract scripting.
  This entry can be closed out at any time by either party without any
  trust or custodianship by broadcasting the most recent version to the
  blockchain.</p>
</blockquote>

CC BY-SA 3.0
2017-11-15T12:58:48.460Z
I'd suggest you to read this: https://bitcoin.stackexchange.com/questions/43700/how-does-the-lightning-network-work-in-simple-terms
MCCCS
CC BY-SA 3.0
2017-11-15T14:33:37.180Z
I marked this as duplicate, and put another question that refers to your link. The question is here https://bitcoin.stackexchange.com/questions/62729/clarification-of-lightning-network-example.
croraf
<lightning-network>
First step in understanding lightning network
croraf
# First step in understanding lightning network

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

I'm checking <https://lightning.network/> and first paragraph of explanation says:

> Bidirectional Payment Channels. Two participants create a ledger entry
> on the blockchain which requires both participants to sign off on any
> spending of funds.

What does this step mean.
Is this ledger entry a transaction?
Is this ledger entry actually one broadcasted multisig transaction signed by both parties that ends on the blockchain?
Or two parties broadcast two multisig transactions, or two regular transactions?
Can you give a numerical example?

> Both parties create transactions which refund the
> ledger entry to their individual allocation, but do not broadcast them
> to the blockchain.

After the first step above then each party crate a regular transaction to refund what? (Can you continue on numerical example above)

> They can update their individual allocations for
> the ledger entry by creating many transactions spending from the
> current ledger entry output. Only the most recent version is valid,
> which is enforced by blockchain-parsable smart-contract scripting.
> This entry can be closed out at any time by either party without any
> trust or custodianship by broadcasting the most recent version to the
> blockchain.

**Tags:** lightning-network

> **Comments:**
> **username_1**: I'd suggest you to read this: https://bitcoin.stackexchange.com/questions/43700/how-does-the-lightning-network-work-in-simple-terms  
> **username_0**: I marked this as duplicate, and put another question that refers to your link. The question is here https://bitcoin.stackexchange.com/questions/62729/clarification-of-lightning-network-example.  

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## 1 answers

### Answer by username_2 on 2017-11-15. Score: 0

The ledger entry is indeed a single multisig 2-of-2 transaction that is included in a block.

Then, both parties create a 1-of-2 multisig transaction that is not yet published to the network, but kept in reserve. This transaction is updated every time you make a transaction between both parties. Once either of the parties decides to close the channel, he or she publishes their second transaction and it is included in the blockchain.


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