You may already be familiar with how the Lightning Network works, but for those who aren’t now, we’ll look at a quick explanation. Like other Layer-2 scaling solutions such as Polygon and Optimism, the Lightning Network is able to have higher throughput because the transactions that take place on it are essentially grouped and then transmitted to the first-level network (Bitcoin for Lightning Network, Ethereum for Polygon and Optimism).
This allows you to make a ton of transactions in a short amount of time because not everyone is looking to use the first level, 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 a channel with any party you like on the network, make as many transactions as you want (at a low, almost zero cost), at almost instantaneous speeds, and transactions will be made final and transmitted to the Bitcoin network only once both parties close the payment channel. There is a smart contract between the parties to ensure that the rules are followed.
The Lightning Network is
therefore a connection between parties globally, with Bitcoin locked into the Lightning Network in the same way it is in traditional DeFi on Ethereum. In order for you to send funds along the Lightning network, the nodes crossed by your payment must be able to cover the transaction until the channels are closed and transactions are finalized on the Bitcoin network. An added benefit of this is that because transactions are bundled, it’s hard to figure out who sent what to whom, making it a more private transaction than doing directly on the Bitcoin mainnet.
There are three main ways you can get started with the Lightning Network today. The first two options (download a wallet) are the best solution if you are less prone to technique, with the third option (running a node) being the most direct way to use and support the network.
Lightning Custodial Wallet
The first option to start using the Lightning Network is to download and use a Lightning Wallet custodial. A custodial wallet means that someone else holds the private keys to your funds. Although less secure than an unguarded wallet (see below), they are good for beginners or those who are less confident in their ability to control their funds and keep their wallet safe.
There are a variety of Lightning Wallet case options such as BottlePay, Blue Wallet, and Wallet of Satoshi. Blue Wallet can actually be set as custodial or non-custodial. Once you’ve chosen a Lightning Wallet, simply download it, set up your account, then add funds. That’s it, you can then start transacting on the Lightning Network.
Unattended Lightning Wallet
The next option to start using the Lightning Network is to download and use an unattended Lightning Wallet. Unguarded means that you have control of your private keys and that you have written a recovery sentence of 12 or 24 words to restore the wallet in case you lose your device. Although slightly more complex than a custodial wallet, learning how to use an unguarded wallet gives users much more freedom and control over their assets.
There are many unguarded Lightning Wallet options available such as Electrum, Breez, Eclair, and Bitcoin Lightning Wallet (BLW). Once you’ve chosen a wallet to use, simply download it for your desktop or mobile device, create a wallet, add funds, and then you can start transacting on the Lightning Network. Some of the wallets, like Breez, also have apps that have built-in Lightning like 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 it has an added benefit as you’re helping to promote the growth of the Lightning network if you choose to configure and run a full node. By running a node and blocking some BTC to the Lightning network, you are increasing the locked value on the network and creating another path for other users to make payments through.
Without going into the complexities of the actual configuration of the node, the basic steps are as follows. Go to the Lightning project’s Github profile and download the latest version of the Lightning Node client for your operating system. Then, run the client. You will be prompted to create or import a wallet. So, if you’ve already created a previously unguarded Lightning wallet, you could simply restore it now and have immediate access to those same funds. If you create a new wallet, you will need to write down the recovery phrase. Finally, you will need to create and confirm a password. After all this, you’re done and can start using the Lightning network from your node.