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Ask CryptoVantage: How Can I Use Lightning Network Right Now?

One of the main problems with Bitcoin (BTC) has always been its scalability, particularly in the areas of transaction speed and throughput.

The base layer of the Bitcoin blockchain can only process about 7 transactions per second (TPS), certainly not fast enough for it to disrupt other payment channels such as Visa or Mastercard. That’s why the concept for the Bitcoin Lightning Network was created back in 2015 as a layer-2 scaling solution for Bitcoin. When it finally launched in 2018, it opened the door for the potential use of Bitcoin for micropayments with fast and cheap transactions, meaning you could use Bitcoin to buy coffee or something of that nature.

How does the Lightning Network function and how can you use it right now? Find out below.

Lightning network

How Does the Lightning Network Operate?

You may already be familiar with how the Lightning Network operates, but for those that aren’t we’ll now go over a quick explanation. Like other Layer-2 scaling solutions such as Polygon and Optimism, the Lightning Network is able to have a higher throughput because the transactions taking place on it are essentially bundled and then transmitted to the first layer’s network (Bitcoin for the Lightning Network, Ethereum for Polygon and Optimism). This allows for a ton of transactions to take place in a short amount of time because they aren’t all trying to use the first layer, with its lower throughput, at the same time.

The Lightning Network works as a series of payment channels. As a user, you add BTC to a wallet that supports the Lightning Network. You can then open up a channel with any party you like on the network, make as many transactions as you want (for a low, nearly zero cost), at near-instant speeds, and the transactions will only be made final and be transmitted to the Bitcoin network once both parties close the payment channel. There is a smart contract between the parties to ensure rules are followed.

The Lightning Network is then a connection between parties globally, with Bitcoin being locked into the Lightning Network the same way it is in traditional DeFi on Ethereum. In order for you to be able to send funds along the Lightning Network, the nodes your payment passes through needs to be able to cover the transaction until the channels are closed and the transactions are finalized on the Bitcoin network. A further benefit to this is that because the transactions are bundled, it’s difficult to figure out who sent what to whom, making it a more private transaction than that made directly on the Bitcoin mainnet.

There are three main ways in which you can start to use the Lightning Network today. The first two options (downloading a wallet) are your best bet if you’re less technically inclined, with the third option (running a node) being the most direct way to use and support the network.

Custodial Lightning Wallet

The first option for you to start using the Lightning Network is to download and use a custodial Lightning Wallet. A custodial wallet means that someone else holds the private keys to your funds. While less safe than a non-custodial wallet (see below), they’re good for beginners or those that are less confident in their ability to control their funds and keep their wallet safe themselves.

There are a variety of custodial Lightning Wallet options such as BottlePay, Blue Wallet, and Wallet of Satoshi. Blue Wallet can actually be set as either custodial or non-custodial. Once you choose a custodial Lightning Wallet, you simply need to download it, set up your account, then add funds. That’s it, you can then start making transactions on the Lightning Network.

Non-Custodial Lightning Wallet

The next option for you to start using the Lightning Network is to download and use a non-custodial Lightning Wallet. Non-custodial means that you are in control of the private keys and that you wrote down a 12 or 24-word recovery phrase to restore the wallet in the event that you lose your device. While slightly more complex than a custodial wallet, learning how to use a non-custodial wallet gives users far more freedom and control over their assets.

There are lots of non-custodial Lightning Wallet options available such as Electrum, Breez, Eclair, and Bitcoin Lightning Wallet (BLW). Once you choose a wallet to use, simply download it for your desktop or mobile device, create a wallet, add funds, and then you can start making transactions on the Lightning Network. Some of the wallets, like Breez, even have apps that have Lightning integrated such as BitRefill and LN.PIZZA (buy Domino’s pizza using the Lightning Network).

Run a Full Lightning Node

The final option is certainly the most complex, but comes with an added benefit in that you are helping to further the growth of the Lightning Network should you choose to set up and run a full node. By running a node and locking some BTC to the Lightning Network, you’re both increasing the locked value on the network and creating another path for other users to make payments through.

Without getting into the complexities of actually setting up the node, the basic steps are as follows. Head to the Lightning project Github profile and download the latest version of the Lightning Node client for your operating system. Next, run the client. You’ll be prompted to either create or import a wallet. So, if for example you already created a non-custodial Lightning wallet previously, you could just restore it now and immediately have access to those same funds. If creating a new wallet, you’ll need to write down the recovery phrase. Finally, you’ll need to create and confirm a password. After all this, you’re done and can begin using the Lightning Network from your own node.

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About the Author

Evan Jones

Evan Jones was introduced to cryptocurrency by fellow CryptoVantage contributor Keegan Francis in 2017 and was immediately intrigued by the use cases of many Ethereum-based cryptos. He bought his first hardware wallet shortly thereafter. He has a keen and vested interest in cryptos involving decentralized backend exchanges, payment processing, and power-sharing.

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