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Definition: Lightning Network

A parallel network to Bitcoin for small payments (micropayments) that are confirmed much faster than regular Bitcoin transactions. Deployed in 2016 and known as a "Layer 2 blockchain," the Lightning Network is used to accumulate multiple payments and then commit a summary to the Bitcoin blockchain (Layer 1).

Payments between two parties are established as smart contract channels that are bidirectional. When either party closes the channel, the final total is settled on Layer 1. If a channel is not open between two parties, payments can also be routed between them providing there are sufficient open channels in the network to provide a path. See Layer 2 blockchain and blockchain.