Bitcoin Forum

Bi-directional Payment Channels allow 2 parties to send each other Bitcoins off-chain, backwards and forwards, up to the amount initially sent by both parties, forever.

This is what allows the Lightning Network to operate. And is very cool.

The problem is that each user has to lock up a certain amount of funds in the channel, and so cannot start up another channel with another user using those coins EVEN if he's not using them directly.

What if you could start up a Trinary Channel, with 3 users ?

This would look very similar to a Bi-Directional channel, but the initial MultiSig setup transaction, would be 3of3.

Then, instead of there only being 2 publishable transactions, there would be 3. One for each participant, and the HTLC would require BOTH secrets from the other 2 users to unlock. Again, all users would have to agree to update the channel, and no user could run off with a previous transaction, without allowing the other 2 to steal their coins. And as a last resort everyone can publish their latest transaction to collect what is owed them.

This way your coins can cover a much larger group of users, since each user would have access to the total amount, rather than chopped up little bits.

And you could obviously go higher. 4of4, 5of5..

It is certainly possible to have more than two parties in a payment channel. It just becomes extremely complex to handle all of the failure cases which results in a lot of different punishment transactions. IIRC this is actually what allows for channel factories to work (basically payment channels created from within payment channels).