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.
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.
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:
- A Lightning Node uses your public IP address as part of the Node address for other nodes to connect with you. Run your node over TOR to avoid this. (LND Guide)
- Lightning Node backups aren't as simple as Bitcoin wallets. For example, check out these guides for backups on LND: How to backup your LND channels and Enable Channel Backups and Fund Recovery on LND. If you aren't technical I suggest not using light client wallet until backups mature. Feel free to play around with one though!
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 wallets have the option to connect your own Lightning node. There are also custodial Lightning wallets meaning they own the bitcoin stored with them.
General Overview of Using A Lightning Wallet
- Open Lightning wallet
- Go through initial wallet setup process.
- Fund your Lightning wallet by sending bitcoin to it. Wait for the bitcoin transaction to confirm.
- 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.
- Lightning is great for frequent smaller valued transactions like shopping.
- Not spending frequently? Consider a Bitcoin wallet for storing your bitcoin.
- Not all companies have lightning integrated yet.
Bitcoin payments can be integrated through:
- hosting a BTCPay server
- a third party payment processor
When you integrate Bitcoin payments, you are still accepting other forms of payments like credit cards. You are just adding bitcoin payments as an additional payment method.
Benefits of accepting bitcoin:
- global reach
- save on fees
- no charge backs
- collect less customer personal info
- safer than physically holding cash
Benefits of accepting Lightning payments:
- Designed for coffee payments
- save on more fees
- instant and secure transactions
- more private than bitcoin payments
- If you are not tech savvy consider hiring a developer to setup BTCPay.
- Enable Lightning payments.
- More BTCPay Video Guides
- bitcoin.stackexchange.com - Search for questions asked already or ask a question yourself!
- reddit.com /r/lightningnetwork/ - Search for questions asked already or ask a question yourself!
- reddit.com /r/Bitcoin/ - Search for questions asked already or ask a question yourself!
- lightningcommunity.slack.com/ - LND community on Slack.
- LN Mainnet Discord
- LightningNetwork/LND github - Reporting Lightning Network LND issues/bugs to developers.