How to

Lightning Wallet: Bitcoin micropayments in a custodian-less wallet

Key facts:
  • It allows you to receive payments through the Lightning network, without owning your own node.

  • For this, it uses two resources: the Olympus server and the WatchTower service.

Lightning Wallet is a wallet that may go unnoticed, but it offers interesting features related to Lightning Network micropayments.

First of all, it offers the ability to receive payments via the Lightning network, without the need for its own node, much less a custodian node that manages the funds. Users thus have complete control over bitcoins without any dependencies.

To make this possible, LW uses two resources: the Olympus server and the WatchTower service.

This server basically keeps our wallet updated in various aspects, such as the current market price of Bitcoin, the list of trusted nodes when connecting to the Lightning network, and most importantly, keeps the Watchtower service active.

In the same way, Olympus records a backup copy of all payment channels that we open in the wallet; but don’t worry, the backup is done via public addresses that are generated with the seed itself, and the private keys are not compromised in any way.

It may be contradictory to mention that Lightning Wallet does not depend on custodian nodes and at the same time provides independence. However, this server works regardless of who is active online. It is available to facilitate some tasks, but no common information reaches it in any way.

It is also worth mentioning that the storage inside this server is done through native tokens, and every time we open a new channel, 1000 satoshi will be charged to the total cost of opening, which corresponds to 50 registration tokens.

When cryptocurrencies are sent and received within the Lightning network, with each movement a commitment transaction is generated, which is propagated to the blockchain in the event of channel closure, thus setting the amount that the two addresses that exchanged bitcoins offline will have.

Now, this model has a weakness: if we don’t start our portfolio in 1,440 blocks, and given that it is an exchange of commitment and mutual trust, the other person can propagate the old transaction, where they are favored over the balances between both wallets, because of which we lose funds. Given that the only way would be to connect, before 1,440 blocks, which is the period in which the last commitment transaction is propagated, it is possible to verify that an attempt was made to unilaterally close the channel, appeal and cause another person to receive a penalty, which may mean a loss of funds.

The solution would be to keep our wallet online, and since it’s a mobile app, it wouldn’t be very profitable, that’s why it’s used WatchTowerwhich confirms that commitment transactions are not propagated without the authorization of both parties, because in that case they will penalize the address that tried to do so.

First of all, we are faced with a portfolio that is completely Open Sourcewhich also offers the possibility of receiving payments via the Lightning network, without the need to use a custodian node, thanks to the Olympus server and the WatchTower service.

Currently, this wallet is only available for Android devices. So, to download it, we will go to the official wallet page where we will get the download link from Play Store.

Source: Lightning Wallet.

Here we will click on Get it on Google Play button to download the app from Play Store.

Source: Lightning Wallet.

What we have here is the first module, where you will find options that allow you to create a new portfolio or open one, starting from an already created seed. In our case, we will continue to choose the first option A new wallet (New Wallet) which will immediately generate, without further ado, a new one.

When opening, We will be asked for a series of permissions for our device about the use of the camera, for scanning addresses or invoices for payment, as well as the possibility of storing data about our equipment.

At this point, we will have a portfolio ready, but not completely.

Source: Lightning Wallet.

You can receive and manage bitcoins from here. However, it’s important to make a secure backup first. That is, you need to copy the recovery seed somewhere else – preferably on a sheet of paper. Since this is the only way we will have to recover the funds stored in the wallet.

Now, to start this step, we need to select an option See Mnemonic Phrase (See mnemonic phrase or equivalent, seed).

Source: Lightning Wallet.

The seed consists of 12 English words, which must be preserved in the order in which they were generated.

The only thing missing, I repeat, is to write them down on paper and then keep them in a safe place. And with this we will make a successful backup.

Source: Lightning Wallet.

To start exchanging satoshis, as you can see in the image above, we will have both portfolios in the main sectionone corresponding to satoshi transfers via Bitcoin, and the other corresponding to transactions made via the Lightning network.

As for receiving funds through the main blockchain, we need to display a button with a Bitcoin symbol, located at the bottom.

Source: Lightning Wallet.

Once here, we’ll select Receive Funds.

Source: Lightning Wallet.

Here we will have to select the bottom option, which is the one that will show us the public address of our portfolio.

Source: Lightning Wallet.

To copy a public address, just click on the address and it will automatically be placed in the clipboard.

In the case of sending, we need to show the option button again, and this time choose Send Funds.

Source: Lightning Wallet.

Then we will find two options. The first one allows us to open the camera with which we can scan the QR code of the address. On the other hand, we can use the address as such, although we must first copy it to the clipboard and then select the Paste Lightning Invoice or Bitcoin address option.

Source: Lightning Wallet.

In this field we will put the amount to be sent, expressed either in dollars, at the top, or in satoshis, at the bottom, because no matter which one we put, its equivalent will be put in the second box. The wallet comes by default configured to manage bitcoin funds in satoshi1 satoshi is the lowest decimal place in BTC, i.e. 1 satoshi = 0.00000001 BTC.

As for commissions, they are deducted from the total amount to send. That is, if we have 100 satoshis in our wallet, we will have 100 satoshis available to send. However, the destination wallet will not receive 100 satoshis, as the commission will be deducted from the total amount to send, and this It will depend on the priority we have set for the transaction: the higher the priority, the higher the commission will be..

The higher the commission, the more likely the transaction will be confirmed in the next block. Source: Lightning Wallet.

To complete this part of the process, we need to confirm that the amount and address are correct, as well as the commission to be paid. As I mentioned before, the higher the amount paid, the faster the transaction can be confirmed. All you have to do is click on the Pay option.

One of the main features that makes BLW stand out is the ability to send and receive payments via the Lightning networkwithout having to own a full node or use a guardian node like I mentioned.

First It is necessary to have at least 300,000 satoshis in your bitcoin wallet, because it is the minimum amount required to open a channel. This does not mean that we will pay or spend the total amount, but that they will be blocked within the payment channel and thus we will be able to mobilize those 300 thousand satoshis within the Lightning network. In other words, this amount will be the capacity that the channel can handle, that is, we will not be able to receive 300,001 satoshis on one channel, nor will we receive an amount that, with what we already have, exceeds this set amount.

In the same train of thought, realizing that 300 thousand satoshis will be blocked, We cannot accept payments without sending first, this is because when opening the channel it will be filled up to the initial amount limit.

As a recommendation, try to have a little over 300k satoshis in your wallet, to cover the Olympus token payment and occasional commissions.

To begin with, we need to go to the options button and select Open a new channel.

Source: Lightning Wallet.

When you press, we will be shown the frame that we see in the previous picture. This informs that BLW uses storage tokens to keep our payment channels active, even if we don’t have a wallet connected. Likewise, with every 1000 satoshis, you get 50 tokens, which are automatically earned when you open a channel.

This list is contributed by Olympus server. Source: Lightning Wallet.

What follows is connecting to a node on the Lightning network. This node will not manage our funds, but will allow connection with other users through payment channels.

Especially The list is provided thanks to the synchronization with the Olympus server. The application itself recommends us to use the ACINQ node, the company responsible for the development of the Eclair wallet, one of the first to implement the micropayments of the Lightning network. There is a possibility to connect to the node of our choice, by scanning the QR code of its address, by clicking on the QR code icon that we see at the top.

As a recommendation, and if you are not sure which node to connect to, choose the safe option, which is the ACINQ node.

Source: Lightning Wallet.

The next step is to indicate the size of the payment channel, where the minimum amount is 300 thousand satoshis. All that remains is to assign it and press Next.

Source: Lightning Wallet.

Since opening a channel involves confirmation within the Bitcoin blockchain, a payment corresponding to the mining fee must be made. As with delivery, the speed at which a transaction is confirmed can depend on how much we pay miners for it.

All you have to do is select Pay and that’s it.

Source: Lightning Wallet.

With this, we have already started to open our channel. Now we have to wait for 3 confirmations to complete the process.

On the other hand, what we have in the previous image is: The node we connect to along with the capacity we have established. The amount of funds that can be compensated, in this case 300,000 since it is newly opened and we have not sent anything yet, with the payment of the commission for the forced closure of the channel. And finally the date it was opened along with confirmations that the payment channel received within the Bitcoin blockchain.

Something interesting that we can do with a wallet is that we can manage more than one payment channel. And it is on this list that we see, where the details about each of them will be seen.

On the other hand, when you click on this list, the following box will appear.

Source: Lightning Wallet.

In these options we find: Show funding transaction, which shows the transaction in which the payment channel was created. Export sanpshot channel, allows you to import payment channel private keys. You must be careful with this option, as this file contains sensitive information, and if it becomes vulnerable, we could compromise the security of the assets within the channel.

Similarly, we have the Close to specific wallet option, an option that allows you to close the payment channel and send funds to a specific wallet, which we need to copy to the clipboard before clicking on it. Finally, there is Close to this wallet, which closes the channel and sends funds to the wallet itself.

To access this entire list again, just click on Lightning Wallet on the main screen.

Source: Lightning Wallet.

Once the payment channel is confirmed, the options will be displayed like this. Above will be data on how much we can receive and spend through the channel.

Once our channel is ready, we can move on to the next step, which is sending and receiving money, always taking care of it First we need to spend a little, because the capacity of our channel will be full if it is new.

To send, we can go to the options button again and choose Send Funds or simply move to the left, because it will automatically open the camera to scan the payment receipt.

Please note that if you choose to paste the billing address, You must have it previously in the clipboard before selecting this option.

Source: Lightning Wallet.

When you scan or paste an invoice for payment, the amount predefined by the issuer will be set immediately. This amount can be changed as there are invoices issued with a balance of 0. However, avoid changing the invoice amount when it is not equal to 0. as there may be inconsistencies between pairs which may lead to partial loss of funds.

Then it is necessary to click on Pay to send our payment, which will be made immediately.

Now that we’ve sent, we can receive, and to do that we have to go to the options button again and select Receive Funds.

Source: Lightning Wallet.

In this case we will choose the higher option.

Source: Lightning Wallet.

Before generating the invoice for payment, we must first set its amount and then select OK.

Source: Lightning Wallet.

With that we will have a new invoice. This will be used to receive one payment and will be valid for 48 hours. On the other hand, if you want to copy the address as such, you have to click on the QR code and it will be copied to your clipboard.

Upon receipt of the payment, we will see a transaction check symbol in the history of the main screen.

If in your case you need to recover your wallet through the recovery scheme, you will understand that the payment channels have not been recovered, so in order to do this, BLW makes available a tool that allows you to recover the funds within them. However, it must be clear that we will not recover channels as such.

To begin, we must go to the settings option, through the gear icon that we see at the top.

Source: Lightning Wallet.

Here we will select the option Use Olympus recovery tools

Source: Lightning Wallet.

This message informs us that the backups stored in Olympus will be used to restore the funds locked in them and transfer them to our Bitcoin wallet. This configuration will not affect the payment channels we currently have open.

We’ll press on The next one and we will have to wait for the backups to be restored and for the transactions to receive the necessary confirmations to see the available balance in our portfolio and thus recover the funds

I will tell you about this topic from my personal opinion. BLW uses several types of backups. Man is always safe and reliable through recovery seeds. The second is done through Olympus, although this does not apply to the entire portfolio. There is also an option that allows you to take a snapshot of your wallet and restore it elsewhere. And finally, a backup made through our Google account, which is stored on Google Drive.

Let’s start with the one done on Google Drive. First of all, I don’t understand how it works. as described, The encrypted file is stored inside the cloud and can only be accessed through the account itselfby which I understand that the security of our wallet will be transferred to the security that we deposit in the Google account, which makes me a little doubtful.

In any case, if you want to use this type of backup, I would recommend that you protect your account well, using 2-step authentication securityor any other that Google makes available to you.

So, if you want to activate it, you have to go to the settings menu, check the GDrive box and select the Google account you want to sync with.

On the other hand, we have a portfolio snapshot. This method is used for quick backups, but it greatly compromises its security.because the recording is stored in a flat file without encryption.

If you intend to use this method, you must go to the settings menu and select the option Use wallet migration tools, which will ask you to save the file. You can save the file to your Google Drive and then import it into the new wallet via the Restore Wallet option you’ll find when you launch the wallet.

Finally, and as a recommendation, try to use the backup copy only via the recovery seed, as long as you write it down on some paper, because this way It will have a secure wallet and can also be returned to another wallet that is compatible with this seed format.

At first, Bitcoin Lightning Wallet may seem like a clunky wallet because of its interface. However, I left a very good impression with it thanks to the excellent usability it offers in the field of Lightning Network payments.

It highlights the way in which payment channels are opened, which can be managed in an orderly manner and without the need for a custodian node, and we are the ones who will have control over the funds. An aspect that really sets this wallet apart from the rest.

However, there are also negative aspects that attract attention. For example, perhaps the interface may cause some kind of repulsion in some users. Furthermore, the backups used by this wallet do not show their function clearly and can be very prone to user carelessness which ultimately compromises the security of the funds.

In conclusion, and summing up all the impressions about this wallet, although it does not have a good interface, I would say that it is one of the best wallets in the Lighting network, which allows you to send and receive funds without problems.

Don’t miss our step-by-step video tutorials on our channel. Youtube.

Featured image of Bitcoin Lightning wallet

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