Hashed TimeLock Contract (HTLC)

Hashed TimeLock Contract (HTLC) is a special feature that is often used in smart contracts that allows modifying payment channels. HTLC facilitates the time-bound transactions between the users.

During an HTLC transaction, the recipient needs to acknowledge the payment within a specific timeframe while submitting cryptographic proof. This timeframe is often measured in the number of blocks. In case the recipient fails to claim the payment, the fund reverts back to the sender.

One of the best features of HTLC is that it is applicable to both bidirectional and routed channels. So, without the need for any trust or intermediaries, payments can be securely transferred to various channels.