Hashed TimeLock Contract (HTLC)

A Hashed TimeLock Contract (HTLC) is a conditional payment method that requires the receiver to either acknowledge receipt prior to a deadline or forfeit the ability to claim the payment in the future, thereby returning it to the payer. After an HTLC is initiated, the transacted funds are held in a primitive smart contract allowing a user to claim the funds by producing a valid hash before a set timeout. The result of an HTLC is a cryptographic proof of payment at a particular time; as a result, they can be used to implement conditional payments. HTLCs are used in payment channel networks such as Lightning.