State channels are off-chain transaction mechanisms that allow participants to conduct transactions privately and efficiently without needing to record every interaction on the blockchain. This technology enhances the scalability of blockchain networks, such as Bitcoin and various altcoins, by reducing congestion on the main chain while ensuring that all participants can settle their final balances on-chain when they choose. By minimizing on-chain interactions, state channels significantly lower transaction fees and improve speed, which is crucial for applications requiring high throughput.
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