Glossary
Watchtower
A third-party service that monitors a payment channel for a user and broadcasts a penalty transaction if a counterparty tries to cheat by publishing an outdated channel state.
Payment channels like those on the Lightning Network require each party to stay online and watch the chain, because a cheating counterparty can broadcast an old, more favourable channel state while the victim is away. A watchtower outsources that vigilance: the user hands it an encrypted "justice" transaction, and the tower broadcasts it automatically if it ever sees a revoked state hit the chain.
Towers only need a short hint derived from each commitment transaction, so they learn almost nothing about the channel's balances or activity. In exchange, users regain the convenience of going offline without risking their funds, which is essential for mobile wallets and casual Lightning use.