Payment Channels

Payment channels are peer to peer channels that can be used to exchange information, money and more.

Properties

Payment channels have the following properties:

• Payment channels can be opened and closed arbitrarily
• You do not need do an on-chain transaction to open a payment channel (but you can have one)
• Payment channels can be private or public
• You can have many peers in a channel
• You can add and remove peers from a channel
• Payment channels are data conduits
• On-chain payments close channels

Connecting and using payment channels

1. User peer connects to provider peer via known endpoint
2. Provider gives peer new endpoint (can be CGA) and Tx template
3. User peer completes TX by adding funding inputs
4. Provider supplies data and information to access next item (e.g. movie frames)
5. Peers keep track of channel state using Sequence

Example - Streaming Movie

The following goes through the sequence of opening, using and closing a payment channel for the purposes of serving streamed content.