Bitcoin ⚡ Lightning Network Wallet Set Up
In last article you could learn what Lightning Network is. Today I’ll show you how to set up a Lightning Network wallet, top it up and send your first transaction.
Wallets types:
There are 2 most common security types of Cryptocurrency (as whole) wallets. Understanding this will help you make better, informed decisions later.
Non Custodial (Self)
- Non custodial, or self custodial wallets are what Bitcoin, Cryptocurrencies and basically whole idea of P2P payments system is. Ones, which are controlled by you, so you are the only person which can access your funds.
Custodial
- Custodial wallets are these centralized. For example on a Centralized Exchange, where your funds are stored on chain, but you have access to off-chain system provided by third party.
In today’s example I will be using non custodial wallet.
Setting up a Lightning wallet
There are many Lightning wallets out there. I will describe them one by one over time. Now I will focus on Phoenix wallet. It’s very easy to use, non custodial and even quite functional for a small business.
I personally use it as a private wallet. Due to its self custodial nature (running a micro node on your phone) and very easy to use interface it makes it perfect (and secure!) choice to onboard Lightning Network with.
How to set up Phoenix wallet?
- Download an App, it’s for both IOS and Android
- Enter the App and follow the instruction.
- Next secure your Seed Phrase! It’s (in this case) 12 words you see in the panel. Seed Phrase is your wallet. Any one that can access your Seed Phrase have access to your wallet.
How to top up a Lightning Network wallet?
It’s very important to notice: You can’t receive any Bitcoin on Lightning Network before you have any Bitcoin on your wallet. That might seems confusing, but it’s because both parties (sender and receiver) pay for routing fees on the way. *This mechanism is fully explained in article: *Bitcoin ⚡️ Lightning Network Explained in Plain English.
To receive Bitcoin you have to send funds from Bitcoin Network (L1) to Lightning Network (L2).
- Go to your Lightning Network wallet → Receive. In opened panel you see QR code (which is address of an invoice) and 4 options.
- To top up your Lightning wallet go to Bitcoin address and copy it (or scan QR).
- Go to your Bitcoin wallet (for example Electrum or CEX non custodial wallet) and send a fraction of $BTC to your Bitcoin Phoenix address.
- You will have to wait for block confirmation. It can take to 30 minutes. After that your wallet will be topped up.
How to make an invoice?
Invoice is most important mechanism. It allows you to receive payments. What you exactly do by sharing an invoice is you share one of the addresses you own. They’re generated based on your Private Key, so it is impossible for it to bug in a way that you share generated with anyone.
Invoice at variable amount:
- Go to Receive
- Check your invoice if it’s “clean”. There is no fixed value in satoshis.
- You can share your invoice to be paid with variable amount.
Invoice at fixed amount:
- Go to Receive
- Go to edit
- Enter amount in satoshis (friction of BTC / 1BTC = 100,000,000 sats)
- Optionally enter a description for it (for example “Private lessons”)
- Click save
- Now you can share your invoice by showing QR code or copying and pasting as a generated hash
Important to know: your invoice address (QR code) won’t terminate.
How to send Bitcoin?
- Go to your Lightning Network wallet → Send. In opened panel you see you can scan QR code or paste in copied address.
- You will be informed if pasted/scanned invoice is for:
Variable Amount — In this case sender enters amount to be transferred.
Fixed Amount — In this case receiver enters the amount that was set to be paid. - Next, depending on type of invoice you accept, or enter amount and accept the payment.
- Next you will see if tx was sent or failed.
- Tap into details of transaction to see the time and cost.
A golden rule says: not your keys, not your crypto.
Tip: So whenever you keep your crypto on a non custodial wallet keep in mind, that it’s better to use it like “coins in your wallet” or hot wallet to trade rather than to keep all of your assets. It might (and already has happened multiple times) be very expensive and hurtful.
I hope you found this article helpful!
If you have any questions feel free to reach me:
Twitter: @Cryptaldinho
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