What is the Lightning Network? How bitcoin payments get faster and cheaper
By SendPay Business · · 2 min read
The Lightning Network is a system built on top of bitcoin that lets people send small payments almost instantly and for very low fees. Instead of recording every payment on the bitcoin blockchain, it settles most of them off the chain.
How payment channels work
- Two parties lock some bitcoin into a shared channel with one on-chain transaction.
- They send payments back and forth by updating the channel balance off the chain.
- Payments can hop across connected channels to reach people with no direct channel.
- When the channel closes, the final balance is recorded on the bitcoin blockchain.
What it is used for
It suits small, frequent payments such as tips, micropayments and paying for low-cost items, where normal bitcoin fees and confirmation times would be too high or too slow.
Limits and risks
Channels need bitcoin locked up in advance, large payments can fail if routes lack capacity, and running your own node takes technical care. Many people use a custodial wallet instead, which means trusting the provider to hold their bitcoin.
Where SendPay fits
SendPay platforms let your customers buy, sell and hold crypto inside your own branded app, with assets held with regulated partners and a trading fee you set. SendPay does not offer Lightning payments. SendPay tells you in writing which licences apply to your platform before you pay.
Build it
Create your own financial platform.
Pick a template, name it, brand it, preview every page before you pay. Your brand, your users, your fees.
Build my platform →Questions people ask
What would a Lightning payment cost?
Work out routing fees hop by hop and compare with sending on-chain.
Lightning Network fee calculator →What will my Bitcoin transaction cost?
Estimate its size and fee at any fee rate.
Bitcoin fee calculator →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.