What's a channel?

A channel is an agreement between two parties to pay each other. Think of it like two people pitching in to a stack of money on a table and moving parts of it back and forth to pay each other. Bob and Alice can open a channel with each other and each deposit 0.5 BTC. They can send their deposited BTC back and forth as much as they want, nearly instantly. When they eventually are ready to cash out, they close the channel and each get the amount owed to them sent to their respective on-chain BTC addresses.

Through some fancy game theory and programming, Bob and Alice can also automatically route payments for other people through this channel that they have open with each other. Imagine Rick wants to pay Jenny via Lightning, but they aren’t directly connected. However, Rick is connected to Bob, and Jenny is connected to Alice. Rick tells the Casa Node that he wants to pay Jenny X amount, and the Lightning Network automatically routes the payment from Rick -> Bob -> Alice -> Jenny. Prrrrretty cool.

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