Lightning basics
The main Bitcoin chain adds a block about every ten minutes and has limited space, so it is best for bigger, less frequent payments. The Lightning Network is a second layer built on top of Bitcoin for small, instant payments.
How it works
Lightning wallets open payment channels that are locked on the main chain. Payments then move through a network of these channels almost instantly, often for a fraction of a penny. Only the opening and closing of a channel touch the main chain.
Using it
- Many mobile wallets now support Lightning and hide the technical parts.
- To get paid you share an invoice, a long code starting with "lnbc", usually as a QR code.
- Lightning wallets are hot wallets. Keep only spending money on them.
Trade-offs
Some easy Lightning wallets are custodial, meaning a company holds the funds. Check before you use one, and keep savings in cold storage as covered in Hold your own keys. Look up any new terms in the glossary, and find out more at lightning.network.
Key takeaways
- Lightning is a layer on top of Bitcoin for small, fast payments.
- Payments use invoices, usually shown as QR codes.
- Keep only spending money on Lightning. Check if a wallet is custodial.
Not financial advice. These lessons are general education only. Bitcoin prices can swing hard. Never put in more than you can afford to lose, and do your own research.