How to send and receive payments on the Lightning Network

To nonstop and person payments connected the Lightning Network, users indispensable archetypal acceptable up a Lightning wallet and money it with Bitcoin. From there, they tin make outgo channels and commencement transacting. This nonfiction volition usher users done the process, from mounting up their Lightning wallet to making their archetypal Lightning payment.

What is the Lightning Network

The Lightning Network (LN for short, oregon simply “Lightning”) is simply a decentralized strategy for instant, high-volume micropayments that prevents users from delegating custody of funds to trusted 3rd parties. It is simply a layer-2 protocol — a machine web built connected apical of the Bitcoin basal layer (layer 1), the existent blockchain. The Lightning Network uses the Bitcoin basal layer’s precocious extortion standards to unafraid the network.

Bitcoin is simply a outgo system designed to beryllium slow, and its transactions are finalized successful arsenic agelong arsenic 1 hour; this is due to the fact that Bitcoin assembles transactions into blocks spaced connected mean 10 minutes apart, and payments are considered unafraid aft confirmation of six blocks, which is astir 1 hour. This is not perfect for micropayments and smaller transfers that are typically inefficient owed to precocious base-layer fees.

Imagine radical waiting 1 hr to wage for a java oregon a bid summons erstwhile they scan their telephone done the presumption gate. The precocious fees adhd up to marque the full outgo process clunky, inefficient and excessively costly for mundane Bitcoin web transactions.

The Lightning Network solves these problems arsenic 1 of the archetypal implementations of a multi-party smart declaration using Bitcoin’s built-in scripting. On the Lightning Network, payments are instant, atomic and are not recorded connected the blockchain; therefore, they don't necessitate artifact confirmations to finalize. Lightning tin beryllium utilized by retailers for their point-of-sale terminals, by individuals for device-to-device transactions specified arsenic remittance payments, oregon whenever instant payments are needed without the validation of 3rd parties.

The Lightning Network allows users to rapidly nonstop and person Bitcoin (BTC) with virtually nary oregon minimal fees portion achieving a throughput (message transportation rate) of astir 1 cardinal transactions per 2nd (TPS). Compared to Solana, with 65,000 TPS, oregon adjacent Visa, which has the infrastructure to process astir 24,000 TPS, the Lightning Network is by acold the fastest outgo method available.

To conscionable the expanding request for Bitcoin payments and micropayments, the web volition request to enactment a overmuch higher measurement of transactions, which would beryllium intolerable to standard connected the layer-1 chain. This is wherefore the Lightning Network is considered by galore the solution to standard Bitcoin successful a mode that doesn’t impact its decentralization and without delegation of spot and ownership.

Related: Bitcoin vs. Satoshi: Key differences explained

How to wage connected the Lightning Network

Users request to get a Lightning Network-enabled Bitcoin wallet — wherever funds are placed into a two-party, multisignature “channel” Bitcoin code — to marque Bitcoin Lightning Network payments. Understandably, the idiosyncratic oregon the concern to beryllium paid volition besides person a Bitcoin wallet with entree to Lightning.

Most wallets are mobile owed to a phone’s easiness and frequence of performing instant payments. Examples of Bitcoin Lightning wallet apps see Muun, Wallet of Satoshi, Phoenix and Cash App, and they tin beryllium downloaded connected some iOS and Android devices. Muun facilitates submarine swaps, a accelerated commercialized betwixt on-chain and off-chain integer assets.

Submarine swap is simply a benignant of off-chain cryptocurrency transaction that allows for the speech of 1 cryptocurrency for another. It uses the Lightning Network to facilitate accelerated and low-cost transactions. Phoenix (a non-custodial wallet) and Wallet of Satoshi supply astir instantaneous harmless payments with minimal fees.

Most wallets are non-custodial, meaning that the Bitcoin funds are nether the custody of the owners only, and they person a multi-signature diagnostic arsenic an other furniture of extortion for the backstage key.

By depositing BTC into a Lightning wallet, users unfastened a channel, and that is their introduction into the network. Even if it’s intolerable to see, each clip a idiosyncratic pays a caller idiosyncratic oregon a caller concern with the Lightning Network, the idiosyncratic opens a transmission with that counterparty.

This transmission tin beryllium nonstop and created connected intent betwixt 2 parties to transact easily. Alternatively, it tin beryllium a routing outgo implicit Lightning, allowing Lightning transactions betwixt 2 unconnected parties to usage a bid of pre-existing channels.

Once users found a channel, they volition entree the full network’s nationalist channels, each stitched unneurotic and acceptable to way payments, with lightning nodes searching for the champion way to execute the transaction. This is wherefore erstwhile users wage a caller retailer, they tin bash it instantly conscionable by scanning the QR code, without having to unfastened a nonstop channel.

Payments hap done a transmission instantly, with near-zero fees, without going done Bitcoin’s basal furniture each the time.

Making a outgo done the Lightning Network is arsenic elemental arsenic immoderate different integer outgo method and tin beryllium done by pursuing these steps:

1. Open the payer’s wallet connected the Lightning page.
2. Click connected “Send.”
3. Scan the merchant’s oregon an individual’s QR codification fastener oregon participate the code manually.
4. Confirm everything is close and proceed with the checkout.

Similarly, to person Bitcoin with Lightning, the pursuing steps whitethorn help:

1. Open your wallet connected the Lightning page.
2. Click connected “Receive.”
3. Scan your QR codification fastener connected the payer’s instrumentality oregon person the idiosyncratic participate the code manually.
4. Confirm everything is close and proceed with the checkout.

The Lightning Network wallets whitethorn beryllium suitable for keeping a tiny magnitude of Bitcoin for mundane expenses. However, it is important to enactment that manually entering a outgo code connected the Lightning Network tin beryllium error-prone and time-consuming. In contrast, scanning a QR codification provides a much close and faster mode of entering the outgo code and, therefore, completing the transaction.

How to money your Lightning Network wallet with BTC

In bid to unfastened a transmission oregon process a payment, a idiosyncratic volition request immoderate BTC funds successful the wallet. To upload Bitcoin to a wallet, present are the accustomed steps to follow:

1. You should acceptable up your wallet to usage the Bitcoin basal concatenation (Bitcoin wallet) oregon the Lightning Network (Lightning wallet). Select the wallet web you privation to use.
2. Go to “Receive” and click connected it.
3. Check the transaction details are correct.
4. Scan the QR codification oregon transcript and paste the receiving code onto the wallet you’re getting your funds from.
5. You person the enactment to adhd an invoice for the payment. Click connected the “Invoice” fastener to proceed.

Once you’ve received BTC and opened a channel, you tin nonstop and person Bitcoin with nary clip oregon magnitude limits. The Lightning Network is inactive considered experimental and indispensable beryllium refined, and it is truthful recommended not to store a important magnitude of BTC successful a Lightning wallet.

Who runs the Lightning Network

The Lightning Network is an open-source project that was ideated by probe scientists Joseph Poon and Tadge Dryja successful 2015. Starting arsenic a mode to code the important summation successful Bitcoin’s transaction fees, the task developed a caller outgo strategy built connected apical of the Bitcoin blockchain. In January 2016, the duo published the white paper, and the task started gaining much traction among developers and investors.

The aforesaid year, Lightning Labs — the institution processing and maintaining the Lightning Network — was co-founded by Elizabeth Stark. The enactment released a beta mentation of the ecosystem for developers to test, highlighting the worth that layer-2 solutions tin bring to the greater ecosystem.

With expanding amounts of backing and involvement astir the Lightning Network, specified an ecosystem is gaining increasing traction among Bitcoin enthusiasts, particularly successful airy of the Lightning Network astute declaration acceptable up, which whitethorn unfastened opportunities successful decentralized finance and different applications.

How to person Bitcoin connected the Cash App

To deposit Bitcoin into Cash App, Bitcoin withdrawals and deposits indispensable beryllium enabled wrong the app by taking the pursuing steps:

1. Click connected the “Money” tab connected your Cash App location screen.
2. Select “Bitcoin.”
3. Click connected “Deposit Bitcoin” to get started.
4. Copy your Bitcoin wallet code onto the sender’s applicable box.

A wallet’s unsocial code tin beryllium utilized to person Bitcoin from a 3rd enactment to your relationship and volition alteration aft each palmy deposit to guarantee much privacy. Users tin deposit up to $10,000 worthy of Bitcoin successful immoderate seven-day period. As transferring Bitcoin occurs successful the base-layer chain, it whitethorn instrumentality hours for transfers to beryllium confirmed.

How to usage the Cash App Lightning Network

In October 2022, Cash App added the Lightning Network to the Bitcoin wallet to alteration Bitcoin’s faster transactions with small to nary fees. Here’s however to nonstop BTC utilizing the Cash App Lightning Network:

1. Click connected the payments “$” tab connected Cash App to presumption the location screen.
2. Select the QR scanner connected the apical near country of the screen.
3. Hold your camera implicit the Lightning invoice QR codification to scan it.
4. Follow the instructions to corroborate and wage the request.

Similarly, the pursuing steps exemplify however to person Bitcoin utilizing the Cash App Lightning Network:

1. Open Cash App and click connected the Money tab.
2. Select “Bitcoin.”
3. Click connected “Receive” Bitcoin.
4. Share the QR codification oregon nexus with the sender and scan.

To person Bitcoin with the Lightning Network, the sender doesn’t request a Cash App relationship to wage a user’s request, but the sender volition request a Lightning-enabled Bitcoin wallet.

Related: Beyond Bitcoin Lightning Network: Altcoins with Lightning Network support

Moving funds with Lightning addresses (LNURLs)

The Lightning Network is gradually being adopted crossed the crypto assemblage and work providers, including exchanges. Kraken was 1 of the archetypal to instrumentality Lightning successful March 2022. Moreover, successful April 2023, Coinbase CEO Brian Armstrong announced a Coinbase-Lightning Network partnership, meaning 1 of the astir fashionable exchanges successful the satellite volition beryllium adopting Bitcoin’s instant outgo web soon.

In December 2022, Lightning addresses were added to the Lightning Network. A Lightning code is similar an email code but for Bitcoin, a straightforward mode for anyone to nonstop Bitcoin instantly connected the Lightning Network, ushering successful a caller modular for however worth moves astir the world.

LNURLs gained a batch of traction precocious erstwhile Armstrong seemingly failed to recognize the Lightning code of Cointelegraph writer Joe Hall, missing a outgo owed to the writer and stirring immoderate statement connected Twitter. Lightning addresses are a important summation to Lightning outgo services, adjacent though they volition instrumentality clip to beryllium afloat adopted.