LibraryInteroperability2013Design paperCorpus record
Bitcoin Payment Channels
Payment channels. Mike Hearn and Jeremy Spilman.
Two parties lock coins in a shared output and exchange updated transactions that are not broadcast. Only the last state, or a dispute, hits the chain.
A reading of the public document. Not a copy of it, and not a claim about a later network that reused the name.
A payments pitch that never names the dispute timeout has skipped the only reason the chain is still involved.
- Evidence
- Primary paper
- Re-measured
- No
- Assumptions
- 3
- Records linked
- 2
Code
Source, repository, and what is actually hosted
- Bitcoin wiki, early designhttps://en.bitcoin.it/wiki/Payment_channels
- The source URL is not a GitHub repository. No code remote is invented.
- Full text is not mirrored. Public availability is not a licence to copy the file onto this site.
- Add to a reading list
01 Claim ledger
What the paper is allowed to say
Each row is a sentence already in the study. The status is the same on every row: a model claim, not a live measurement.
Claim 01 · Paper model
The defect
Putting every coffee on the Bitcoin chain makes the chain the bottleneck and the fee schedule the product.
Claim 02 · Paper model
The rule
Two parties lock coins in a shared output and exchange updated transactions that are not broadcast. Only the last state, or a dispute, hits the chain.
Claim 03 · Paper model
How it is put together
The lock is on-chain. The updates are off-chain. A dispute needs a timeout so an old state can be punished or replaced. Capacity is the locked amount, not the chain's throughput.
Claim 04 · Paper model
Where the claim stops
This early design is not the Lightning protocol.
02 Three cuts
Observation, model, falsifier
A desk does not stop at the summary. Each claim is cut three ways, using only this study's own assumptions and checks. Nothing here is a new figure.
01 The defect
02 The rule
Observation
What the study says
Two parties lock coins in a shared output and exchange updated transactions that are not broadcast. Only the last state, or a dispute, hits the chain.
Model
What has to hold
A channel that cannot punish an old state is a different, weaker object.
Falsifier
What would retire it
What is broadcast if both parties vanish?
03 How it is put together
Observation
What the study says
The lock is on-chain. The updates are off-chain. A dispute needs a timeout so an old state can be punished or replaced. Capacity is the locked amount, not the chain's throughput.
Model
What has to hold
A channel that cannot punish an old state is a different, weaker object.
Falsifier
What would retire it
How long can an old state be contested?
04 Where the claim stops
03 Sequence
One action, as an operating tape
- 01Open by funding a shared output.
- 02Exchange signed updates that spend it.
- 03Close by broadcasting the latest, or dispute if the other party broadcasts an old one.
- 04What is broadcast if both parties vanish?
04 Load-bearing
The argument, and where a pitch drops it
Why it is still on the desk
The cut
A payments pitch that never names the dispute timeout has skipped the only reason the chain is still involved.
Why it carries weight
If this cut is skipped, the paper's name is being used without the mechanism that makes the name mean anything.
Where it is dropped
A later client, parameter or reward formula is a different object from this paragraph.
After the text
The cut
Lightning is the routed version of this idea, with its own penalty rules. The 2013 sketch is the bilateral case.
Why it carries weight
If this cut is skipped, the paper's name is being used without the mechanism that makes the name mean anything.
Where it is dropped
This early design is not the Lightning protocol.
05 Register
What has to be true
Model · Not re-measured
This early design is not the Lightning protocol.
Model · Not re-measured
A channel that cannot punish an old state is a different, weaker object.
Model · Not re-measured
Capacity is not the same as a bank balance.
06 Divergence
What happened after the paper
Lightning is the routed version of this idea, with its own penalty rules. The 2013 sketch is the bilateral case.
A later client, parameter set, or reward formula is a different object. Cite this paper for the mechanism. Cite a primary release for the network. This desk has not re-run the proof.
07 Pre-mortem
What to check before you use the idea
- 0 of 3 marked on this browser. A mark is a reading note, not a pass, a rating, or a recommendation.
08 Anatomy
The paper, in the order a builder needs
The problem it names
Putting every coffee on the Bitcoin chain makes the chain the bottleneck and the fee schedule the product.
What the design proposes
- The lock is on-chain. The updates are off-chain.
- A dispute needs a timeout so an old state can be punished or replaced.
- Capacity is the locked amount, not the chain's throughput.
How the mechanism is specified
- Open by funding a shared output.
- Exchange signed updates that spend it.
- Close by broadcasting the latest, or dispute if the other party broadcasts an old one.
What this page does not treat as proven
- This early design is not the Lightning protocol.
- A channel that cannot punish an old state is a different, weaker object.
- Capacity is not the same as a bank balance.
Why the desk still reads it
A payments pitch that never names the dispute timeout has skipped the only reason the chain is still involved.
09 Lexicon
Terms, opened into the record
- Channel
- A locked output whose balance is updated off-chain.
- Dispute
- The on-chain path that rejects a stale update.
10 Repository
Every linked record on this page
Underlined words open a page that already exists: a concept, a protocol profile, a failure record, or another paper. If a word is not underlined, this desk does not have a record for it.
This is Blockchain Lab's reading of a public design paper. It is not the paper, not a copy of it, and not an offer of tokens, equity, custody or a partnership. Later network behaviour can diverge from the text. Nothing here is investment, legal or technical advice.
Research status: Design paper. Last reviewed: 1 October 2026. This is a reading of a public paper, not investment, legal or security advice.