Hashed TimeLock Contract (HTLC)

A Hashed TimeLock Contract (HTLC) is a conditional payment method whereby the receiver must acknowledge receipt of the payment within a certain amount of time, or the payment is not completed. After an HTLC is initiated, the funds are held in a smart contract allowing the recipient to claim the funds by producing a valid hash before a set timeout. HTLCs are used in payment channel networks such as Lightning and other technologies such as atomic swaps.