How to Use Bitcoin Lightning Network for Quick Transactions

Paigambar Mohan Raj
Source: BitPay

The Lightning Network is a layer-2 protocol on top of the Bitcoin (BTC) network. The platform makes advantage of micropayment channels to scale the network to make transactions quicker and cheaper. Moreover, the Lightning Network is capable of handling a lot more transactions than BTC’s layer-1 base network.

How to use Bitcoin Lightning Network?

Users must first create a Lightning wallet and fund it with BTC in order to send and receive payments on the Lightning Network. From there, they can start setting up payment methods and begin transacting. Some popular Lightning wallets include Muun, Wallet of Satoshi, Phoenix, and Cash App. These wallets can be downloaded and installed on both iOS and Android devices. Additionally, the majority of wallets are non-custodial, which means that the owners are in control of the Bitcoin funds. They also offer a multi-signature feature as an additional measure of security for the private key.

The Lightning Network is no different from other digital payment methods in terms of ease of use. Users can send funds by following the steps below:

  1. Open the payer’s wallet on the Lightning page.
  2. Tap on “Send.”
  3. Scan the QR code or enter the recipient’s address manually.
  4. Confirm the amount and other details, and then head to the checkout.

On the other hand, to receive funds via Lightning, users can follow the steps below:

  1. Open you wallet
  2. Tap on “Receive.”
  3. The sender can scan the QR code, or enter the recipient’s address.
  4. Head to checkout.

How does the network work?

Users enter the network by opening a channel by depositing Bitcoin into a Lightning wallet. Every time a user utilizes the Lightning Network to pay a brand-new individual or brand-new company, the user establishes a channel with that counterparty.

Once user creates a channel, they have access to all of the network’s open channels. The channels are all connected and prepared to route payments while lightning nodes look for the most efficient path to complete the transaction. Because of this, users can instantaneously pay a new retailer by scanning the QR code, eliminating the need to start a direct channel.

The Lightning Network has vastly increased Bitcoin’s scalability, leading to millions of transactions per second. It is anticipated that the use of the network will only increase in the near future. Binance also recently announced that it would integrate the Lightning Network for quick transactions.