Point Time-Locked Contract (PTLC)

A Point Time-Locked Contract (PTLC) is a conditional Lightning Network payment that locks funds to a point on Bitcoin's elliptic curve rather than to the preimage of a hash. It is the privacy-improving successor to the Hashed Time-Locked Contract (HTLC). Like an HTLC, a PTLC still combines a secret condition with a timeout that refunds the sender if the payment fails, but it replaces the hash lock with a cryptographic point unlocked by a corresponding signature.

Adaptor signatures do the work

Each hop along a route prepares an adaptor signature, a half-finished signature that can only be completed once the payment's secret is revealed. When the final recipient claims the payment, the secret propagates back along the route, letting each intermediary complete its own signature and pull funds. Because every hop uses a different point, the contracts no longer share a common identifier.

The privacy and fungibility gain

With HTLCs, every hop on a route shares the same payment hash, so routing nodes and chain observers can correlate the hops and trace a payment end to end. PTLCs eliminate that fingerprint: each hop looks unrelated, and if a PTLC is ever forced on-chain it appears as an ordinary single-signature spend, indistinguishable from any other Taproot payment. PTLCs became possible after Schnorr signatures arrived with the Taproot upgrade, and they require every node along a route to support them, so adoption is gradual.

PTLCs build on the same adaptor-signature primitive used in Discreet Log Contracts and pair with on-chain safety mechanisms like the anchor output.