A State Channel is a method used in blockchain technology to facilitate off-chain transactions between participants. It allows users to interact and exchange value without needing to record every transaction on the main blockchain, which can be slow and costly. This approach enhances scalability and reduces fees while maintaining security. In a State Channel, participants create a private channel where they can make multiple transactions. Once they finish their interactions, they can close the channel and submit the final state to the main blockchain. This process ensures that only the final outcome is recorded, making it efficient for applications like Ethereum and Bitcoin.