A state channel is a two-way communication path between two users, network nodes, or users and services. This smart contract upholds predetermined guidelines for off-chain transactions.
Each transaction generates a new state based on the prior state that is cryptographically verifiable on the blockchain and is signed by all parties. Since the smart contract only recognizes the highest state as valid, any new state renders the previous state invalid.
Because state channels are a generalization and a more potent version of payment channels, they lack a “direction.”
