Crypto Lightning Wallet Explained

Since the introduction of cryptocurrency in 2009, when Bitcoin was first released on the market, cryptos have experienced a dubious reputation. It’s only in the last few years that cryptos really started booming, and people everywhere sat up and took notice (read this – crypto mining platforms).

Even with new cryptos popping up, Bitcoin is still one of the most popular cryptocurrencies on the market. However, the Bitcoin blockchain has experienced network problems threatening to bring the crypto to its knees. Lightning wallet options were the solution to that problem.

Bitcoin’s lightning network (LN) and the wallets that support it offered an alternative to the congested blockchain. It also lowered the high transaction fees Bitcoin users are currently experiencing.

While this network is still new on the market, it promises to show tremendous potential. Your user experience is faster and more user-friendly, with everyday payments now available.

We always aim to stay updated on the latest crypto innovations and ensure our readers can access relevant information. As such, we’ve looked at what the LN is and how to use it, and the best lightning network wallet options available.

We evaluated the pros and cons and looked at what makes users so excited about this network.

How Does the Lightning Wallet Work

Lightning wallets are crypto wallets that can use this Bitcoin channel to send and receive smaller BTC transactions.

While you might have a crypto wallet, lightning network being available isn’t guaranteed, as it’s pretty new to the crypto market. However, to understand how a lightning wallet works, you first need to understand the LN.

Lightning Network

The LN is a secondary layer that operates semi-independently from the Bitcoin blockchain. It’s connected but doesn’t pass all transactions through it. Bitcoin created this network in answer to the problem it had with processing multiple transactions across the blockchain.

Currently, the Bitcoin blockchain can process around seven transactions per second. This low number of possible transactions per second is a significant problem if it wants to become available for mainstream use (read this – Solana staking explained).

As one of the world’s top payment methods, Visa can process up to 65,000 transactions per second. If Bitcoin wanted to compete on the same level, it needed to solve the problem it had with congestion in its network. Developers suggested many possible solutions.

However, none managed to solve the transaction problem and remain faithful to the original model of the Bitcoin system.

However, it seems that the LN might provide the solution. This network operates on a second layer separate from the main blockchain. As such, not every transaction has to go through the primary Bitcoin blockchain.

Up to one million transactions can be handled on this network each second. It also creates a direct channel between the buyer and seller using lightning invoices.

Lightning invoices are QR codes one party generates, and the other party scans to make payment. It allows you to open peer-to-peer channels between two parties and complete multiple transactions.

Only when the parties close the channel are all the transactions consolidated and moved to the main blockchain’s ledger.

Bitcoin designed this channel to handle smaller BTC transactions that congest the network. As such, using this network is not advised if you want to transfer a large amount of BTC.

Using this Bitcoin channel to pay for your Starbucks is fine, but keep the significant transactions on the Bitcoin primary blockchain.

How to Use a Lightning Wallet

You can use a lightning wallet app on your Android or iOS smartphone to easily access quick Bitcoin transactions. While there are custodial and non-custodial options, setting up and using your iOS lightning wallet or lightning wallet android app is pretty straightforward.

1. Download one of the recommended wallets
2. Set up your new or import your existing wallet using the app
3. Save a 12-word security phrase and confirm it with the app
4. Once your wallet is created, you can start making light wallet crypto transactions
5. Open your settings in the Receive section and enable lightning transactions
6. To make or receive a lightning payment, you can now click on the receive or payments button
7. Generate a lightning invoice to receive a payment or scan the provided QR code to make a payment

However, like all things, the lightning network has pros and cons to using it. Before using anything, especially networks and wallets that handle your finances, it’s essential to consider these pros and cons. We looked at the most prevalent benefits and drawbacks of the network below.

Pros

• Fast transactions
• Can handle up to one million transactions each second
• Lower fees than the primary Bitcoin blockchain
• Offers scalable payments
• Easily accessible on supporting wallets
• Individual peer-to-peer channels

Cons

• Not many wallets support the LN
• Lower transparency in the ledger on individual lightning transactions
• Not equipped to deal with more significant transactions
• Offline transactions are not available

Top 5 Crypto Lightning Wallets

Deciding on a crypto wallet you want to use isn’t always easy. If you want to use lightning hardware wallet options might not be the way to go (what is DEX blockchain).

While these are great options for offline transactions, a Trezor lightning network doesn’t exist, not any other LN channels on hardware wallets. Hardware wallets and the LN are incompatible, as LN doesn’t support offline transactions.

On some other wallets, like the trust wallet lightning network token exchanges to other cryptos might be possible, but using the network for payments might not be. While the LN might not be available on all crypto wallets, we’ve looked at the best lightning crypto wallet options.

Eclair Wallet

Eclair is probably the best lightning wallet Android users can download. It’s incredibly user-friendly, especially to new crypto users, and allows transactions with the on-chain Bitcoin network, as well as the LN. It’s non-custodial, meaning it’s a decentralised peer-to-peer network that creates a direct link between the buyer and seller.

Zap Wallet

Zap is a crypto wallet available on all devices and allows users to make LN transactions. Jack Mallers created this wallet and is also solely responsible for maintaining the system.

However, this wallet is geared towards more advanced crypto users, and beginners might have difficulty navigating the platform. It’s a non-custodial option for people who prefer to control their own Bitcoin wallet.

Breez Wallet

Breez is one of the best non-custodial lightning wallet iOS and Android options, giving you instant access to mobile Bitcoin transfers.

It opens the LN channel for you, making it highly user-friendly, and it can even encrypt the channel to your google drive. While this might mean you have less anonymity, it does provide a backup in case your channel or app gets deleted.

Muun Wallet

Another wallet lightning transactions are available on is the Muun wallet. Muun offers fast and efficient services, with access to both on-chain and LN payments.

This wallet offers advanced security features to ensure your funds are safe, even if you lose access to your app or device in some way.

Muun is a non-custodial wallet that integrates the on-chain network and wallet lightning network so that you only have one BTC balance you use for both channels instead of transferring BTC from one network to the other.

Wallet of Satoshi

One of the most accessible wallets, the Wallet of Satoshi, doesn’t require you to create a wallet or setup, as it uses your device as your username. You can download and instantly start making transactions across LN channels.

It’s a custodial wallet, meaning a centralised authority manages it, opens the channels for you and more. You can also use your email as a backup in case your device is lost and even find and view merchants that accept LN payments in your area.

What Makes Lightning Network Wallet So Great

The lightning network is the solution Bitcoin found to their problem of scalable payments and allowing more transactions each second. However, understanding what makes the LN so great means you have a better idea of whether to use it or not. There are several benefits to using it, which we looked at below.

Fast Transaction

The LN allows up to one million transactions each second, making it fast and easy to use. Unlike the on-chain network’s congested network, you can enjoy instant transactions anywhere. You create a direct peer-to-peer channel and simply need to create a lightning invoice and scan a QR code to complete the transaction.

Cheap Fees

Unlike the primary blockchain network, this second layer offers much lower fees. With Bitcoin’s primary blockchain network, the fees are often higher than the small amount you’re trying to transact. Now, you can rest easy with low fees that are barely noticeable compared to the previous fees.

Anonymous Transactions

Since the LN uses a second layer network not directly connected to the on-chain network, it increases your anonymity. Creating a peer-to-peer network means you’re directly transacting with the other party, and it’s not being processed through the primary network.

Once you close the channel, it’ll consolidate the payments and record the summary in the on-chain network’s ledger.

Scalable Connections

Unlike the normal Bitcoin channels, the LN allows you to access new payment channels using connected channels.

You can jump channels in this way to connect faster and easier, even if you only have one connected channel. Basically, if you connect to channel A and channel A is connected to channel B, you can also connect with channel B as long as you keep open the original connection with channel A.

Perfect for Everyday Use

This network is created explicitly for everyday use, with the channels supporting transactions of small amounts. While you can’t transact more significant amounts, you can easily use it to buy your Starbucks coffee or that doughnut you’re really craving. It’s suitable for mainstream usage compared to previously only being suitable for investors.

Conclusion

Cryptos have become more popular over the years, and these days, it’s not strange to use cryptocurrency as a standard fiat currency for certain transactions.

However, Bitcoin has always had trouble keeping its original model while allowing for more than seven transactions per second.

The lightning network offered a unique solution to their problem, allowing users to make peer-to-peer channels that can handle up to one million transactions per second.

While not all wallets that support lightning network, many of the top crypto wallets do and, as such, easily allow you to make crypto payments daily. It also allows you to control your crypto transactions and receive quick payments using the QR code invoices.

Look at our list of recommended crypto lightning wallets you can download and use on your mobile to make BTC and other crypto payments easier and much faster.