What is Payment Channel?
A payment channel is a relationship between two parties backed by an on-chain funding transaction that lets them exchange many off-chain payments by updating signed balances. Only the opening and closing transactions ever hit the chain.
Why Payment Channel matters
Understanding Payment Channel is part of building a solid mental model of how Bitcoin, blockchain and Web3 systems actually work. Concepts in the Bitcoin category sit at the foundation of the broader stack — get them right and the rest is far easier.
Learn this interactively
Reading the definition is a start. ZeroToBlock teaches concepts like Payment Channel through hands-on, browser-based simulations. Build the mental model by actually using it:
- Bitcoin 101 — interactive fundamentals course
- Bitcoin Proof of Work — mining, hashing and consensus
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Related terms
- Lightning Network — Bitcoin's payment-channel scaling layer.
- Bitcoin — The first decentralised digital currency, launched in 2009.
More bitcoin terms
- Address (Bitcoin / Crypto Address) — A public destination for receiving cryptocurrency.
- Block Header — The metadata at the top of each block.
- Block Reward — New coins paid to the miner of a block.
- Difficulty — A parameter that controls how hard it is to mine a block.
- Double Spend — Attempting to spend the same coin twice.
- Halving — The scheduled 50% cut in Bitcoin's block subsidy.
- Hash Rate — The total computational power securing the network.
- Mining — Producing new blocks by performing Proof of Work.
Keep exploring
Continue with the full blockchain glossary — 136 terms in total — or read the developer blog and FAQ for deeper context.