Thread by @BastienSinclair

🧵 Are Lightning Network Transactions On-Chain? Let’s settle this with facts.

There’s confusion (and heat) over whether Lightning payments are “real Bitcoin” or just IOUs.

Here’s the truth, backed by @Core_LN ⚡👇
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1. Lightning is a second-layer protocol.

It’s built on top of Bitcoin.

It uses the base chain (on-chain) only to open and close payment channels — or resolve disputes.

All other activity happens off-chain.

🧠 Source: Lightning Labs FAQ
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2. Opening a Lightning channel is on-chain.

Two users lock Bitcoin into a 2-of-2 multisig transaction.

This is a normal Bitcoin transaction and does hit the blockchain.

That’s the BTC being committed for use on Lightning.
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3. Lightning payments are off-chain.

Once the channel is open, all payments are just balance updates between parties.

They’re NOT recorded on the Bitcoin blockchain.

⚡ No miners
⚡ No fees
⚡ Instant
⚡ Final
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4. Lightning uses real Bitcoin — just not on the base layer.

The BTC is real — it was locked on-chain at the start.

You’re transacting with cryptographically signed state updates secured by Bitcoin’s rules and smart contracts.
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5. Routing through nodes = off-chain too.

If you don’t have a direct channel, your payment can route through others (like Bob) who front liquidity.

Still off-chain. Still real Bitcoin.

Node operators earn small routing fees.
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6. Closing a Lightning channel is on-chain.

When you’re done transacting, the final balance is broadcast to the blockchain.

This closing transaction settles to the base layer — just like any other Bitcoin send.
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7. TL;DR Table:

Action On-chain?
Open a channel✅ Yes
Lightning payments❌ No
Routed via nodes❌ No
Close a channel✅ Yes
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8. The verdict:

✅ Lightning transactions are off-chain.
✅ They use real Bitcoin.
❌ They are not recorded individually on the base layer.
⚡ They are secure, instant, and built on Bitcoin’s rules.
That’s the point — scaling Bitcoin without bloating the chain.
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✅ Final word:

Lightning uses real Bitcoin.
But not every Lightning transaction is recorded on-chain — only the opening and closing of channels are.

All payments in between? Off-chain.
That’s how Bitcoin scales.

— @BastienSinclair
9/9 🧵