BTC2019

In this course, we start by comparing the payment process of Bitcoin in which the recipient can be offline with that of the Lightning Network where both parties are heavily involved in communication. We understand the concept of atomicity and understand on a visual level by comparing with a real world court system how a series of Hashed Time Locked Contracts (or HTLCs) enable the forwarding of funds across a network of payment channels in a way that we do not have to trust the intermediary nodes. This will show how the Lightning Network is an effort to reduce the Bitcoin Blockchain to what it is best at - decentralizing trust - and move the value transaction layer off chain away from the slow Blockchain technology.  

We will then look into more details how HTLCs are transported via onion Routing based on the SPHINX Mix format defined in BOLT 04. Once this is achieved we go back to BOLT 2 and add the last piece to the channel update protocol which is the protocol of how two nodes agree to set up and settle HTLCs.

Finally, we will discuss problems and downsides (like pathfinding, uncertainty or stuck payments) with the current construction and proposals that could improve on them.

This course is appropriate for current and aspiring blockchain developers who want to understand HTLCs.

Prerequisite: basic understanding of payment channels