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January 05, 2018, 01:28:51 PM |
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I don't think there's really a simple way of explaining it because the underlying mechanisms are rather complicated, but at the most basic level, it allows the use of smart contracts for "instant" confirmations. I can sign a transaction and hand it to you off chain, at which point it's already final because I can't take it back. That effectively means you're already holding the coins even if the transaction hasn't actually confirmed yet. That's my understanding of it, at least.
I don't think there are clear downsides, but it makes use of payment channels to facilitate transactions and it seems to be unclear how much that would cost.
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