The Lightning Network

LIGHTNING NETWORK


Lightning Network

Flowers

The Lightning Network is second layer protocol built on-top of Bitcoin to enable cheap, instant and secure transactions designed to scale for global coffee payments (in a way that is secure and still decentralized).

A transaction on the Lightning Network costs a fraction of a cent.

The Lightning Network is still in the early stages of development and adoption, thus still improving and rapidly innovating.

Method A: Using a Lightning Node (For Technical Users)

Similarly to how using a Bitcoin node is the most secure way to transact on-chain, the same holds true for a Lightning node on the Lightning Network. But just like a Bitcoin node, it takes some time to set one up and you need to be computer savvy. Once you setup a Lightning node, you can connect it to a more user friendly Lightning wallet. If you choose to use just the Lightning node itself to transact you'll need to use the command line.

A Lightning node requires a fully synched Bitcoin node and some manual work to setup. The Bitcoin node can be run in pruned mode.


Lightning Node GitHubs:

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Caution

Method B: Using a Light Client Wallet

Casual users will probably be going this route; A light client wallet will work without your own Bitcoin or Lightning node because it connects to a remote lightning node from an external source. This means there is an element of trust required when using their wallet.

Many light client wallets have the option to connect your own Lightning node, should you decide to. There are also custodial Lightning wallets meaning they own the bitcoin you store with them but they add convenience.

Lightning wallets are evolving and some of them, such as the Phoenix have a seamless Bitcoin / Lightning integration. For example, if you send on-chain bitcoin to the Lightning wallet, it will automatically swap and be useable on the Lightning Network (and vice versa). Deveolopers are building wallets to ensure that they are secure, trust-minimized, fast, cheap and seamless. The transition gap or incompatibility between a Bitcoin and Lightning wallet will be non-existent in the future.


General Overview of Using A Lightning Wallet

  1. Open Lightning wallet
  2. Go through initial wallet setup process.
  3. Fund your Lightning wallet by sending bitcoin to it. Wait for the bitcoin transaction to confirm.
  4. Open Lightning channels with other lightning nodes using the available on-chain bitcoin balance in the wallet. Opening a channel can take some time to complete, but once opened you can transact with each other, anyone else that has a channel connected to them, then anyone connected to those nodes and so on. Wallets are starting to take care of this on their end, so that the user doesn't have to worry about it.
Helpful Lightning tools and websites

Some places that you can get help with Lightning:


“[..] if the gold bet works, the bitcoin bet will probably work better [..].”
Stanley Druckenmiller - Highly acclaimed U.S billionaire investor