# Lightning Network

*Crypto & Digital Assets — Finicade finance glossary*

The Lightning Network is Bitcoin's payment layer: two parties open a channel, transact freely off-chain, and settle the net result on-chain. It makes small instant payments viable on a chain that processes only a few transactions per second. Its constraints are practical — channels need funding in advance, and routing a payment requires liquidity to exist along the path.

**Also known as:** Lightning, payment channels, off-chain payments

**Related terms:** [Bitcoin](https://finicade.com/glossary/bitcoin), [Layer 2](https://finicade.com/glossary/layer-2), [Gas Fee](https://finicade.com/glossary/gas-fee), [Payment Rails](https://finicade.com/glossary/payment-rails), [Real-Time Payments](https://finicade.com/glossary/real-time-payments)

Source: https://finicade.com/glossary/lightning-network