Say Alice wants to buy a used laptop from Bob who wants a $40 payment on the Lightning Network in exchange for the laptop. Alice could buy $50 of Bitcoin, she could then open a channel with Frank who runs a well connected Lightning network node. Alice will pay a network fee for this and now has a $49 credit on the Lightning Network. Bob then provides a QR code to invoice for the laptop. Alice will click pay, and if things go well the Lightning Network will find a route to pay Bob. Such a route may deduct her balance with Frank, who may then pay Carla, who routes the payment to Bob. Now Frank and Carla may take a little fee, but this fee is generally negligible. It’s also possible that no route can be found between Frank and Bob. In such a case, Alice would need to open a channel with a different node of the network, tying up much more than the $40 that Alice budgeted for the laptop.
Let’s say the payment goes through and Bob hands over the laptop. Now Alice will have a $9 credit on the network. She can spend this as long as a route can be found to the merchant. Let’s lay that Alice sells some old books for Lightning Network payments of $15, then she settles a bill after a nice meal at a restaurant by paying her lunch companion $11. Alice will then have $13 credit on the channel with Frank. All these payments will not be on a blockchain. Alice could choose to close the channel, which would then provide her with $12.50 of Bitcoin after fees. Courtesy Of DashNews
