The Bitcoin Lightning Network DRAFT Version 0.5 Joseph Poon <joseph@lightningwork>, Thaddeus Dryja <rx@awsomnet.org> Abstract. The bitcoin protocol[1] can encompass the global financial transaction volume in all electronic payment systems today, without a single custodial 3rd party holding funds or requiring participants to have any more than a computer on a home broadband connection. A decentralized system is proposed whereby transactions are sent over a network of micropayment channels (a.k.a. payment channels or transaction channels) whose transfer of value occurs off-blockchain. If Bitcoin transactions can be signed with a new sighash type which addresses malleability, these transfers may occur between untrusted parties along the transfer route by contracts which are enforceable via broadcast over the bitcoin blockchain in the event of uncooperative or hostile participants, through a series of decrementing timelocks. 1. The Bitcoin Blockchain Scalability Problem The blockchain as a payment platform, by itself, cannot cover the world’s commerce anytime in the near future. If each node in the bitcoin network must know about every single transaction that occurs globally, that may create a significant drag on the ability for the network to encompass all global financial transactions. The payment network Visa is believed to do 45,000 peak transactions per second on its network during holidays, and hundreds of millions average per day. Currently, Bitcoin supports around