Bitcoin with Lightning Network - What is it and why use it? FAST & CHEAP transactions
Hi fellow MPGH'ers,
NOTE: Do your own research! Never take advice about crypto from anyone without using reputable sources to research it yourself. This is not for making money, it's simply a better payment mechanism.
I don't post often but have used MPGH for a few years now to buy small ticket items like licenses or game gift cards. I ONLY pay with Bitcoin and Ethereum and seek out sellers that accept it as a payment method. But as others no doubt find, using Bitcoin (even though my favourite crypto) is expensive, slow and I have to use mixing services to not expose my addresses and holdings. So how do we overcome this issue? EASY!
Enter the "Lightning Network"
Bitcoin is a permanent ledger that stores every transaction between parties in an immutable decentralised way. This can be fantastic, however not of much use when it comes to buying small ticket items. It's slow and costly and there is no value to store this transaction. A second layer was built on top of Bitcoin called the Lightning Network. I have used the Lighting network for about 9 months now to pay for many different things - it's practically instant, transactions cost less than 1c, it doesn't expose your Bitcoin addresses and the Android client I use even runs behind Tor.
How does it work?
Both the buyer and seller must have a Lightning Wallet installed and you must already own some Bitcoin. The apps are available in their respective stores:
Android Play Store: Phoenix Wallet by ACINQ
iOS App Store: BlueWallet by BueWallet Services
(Several companies are actively working on the wallets and protocol. Quite a few wallets have been released, but I personally just use the two above.)
SECURITY: When you install the app, it's going to generate a 12 word secret key for you. TAKE NOTE OF THIS BUT DO NOT STORE ONLINE. If anyone sees this, they can steal all your money. You will also need these same 12 words to RESTORE your Lighting wallet if you lose your mobile device.
The Lightning network works by creating channels between buyers and sellers. If there is no direct channel, it's smart enough to automatically find a path between you and them. To get your own channel you need to deposit a tiny bit Bitcoin into a unique address the wallet will generate - this is called FUNDING a Lighting channel which is necessary to create the channel. At any time you can withdraw your Bitcoin back on-chain again to a standard Bitcoin address when you need to.
If you're a BUYER, make sure to put enough Bitcoin into the channel to last you a while. Personally, I deposit about $20 at a time. (I originally put in $100 and it's worth $200 now with Bitcoin's recent run!!)
If you're a SELLER, you just need to deposit enough to fund the channel creation. Probably less than $5.
How do you actually use it then?
After you have followed the in-app instructions, deposited some BTC into your Lighting wallet address and it shows the deposit, the channel has likely been created and you're ready to go.
In the Lightning app the Seller simply enters, in dollar value, the price for the items they're selling and generate an INVOICE. Copy/paste this string to the buyer. The Buyer then copy/paste this string into their Lightning wallet. It'll show them the total amount in dollars and they hit PAY. Seconds later the Seller will have the money.
Steps for Phoenix Wallet - SELLER
1) Tap on "Receive"
2) Tap the little "Edit" icon
3) It'll take you to a "Edit my invoice" screen. You can change the "Amount" drop down to USD (if it isn't already) and type in how much. Tap on "Create Invoice"
4) Now tap the "Copy" icon and paste the string to the Buyer.
Steps for Phoenix Wallet - BUYER
1) The Seller will give you a long string (it starts with "lnbc"). This is the invoice they generated. Copy this string.
2) In the Phoenix app, tap on "Send".
3) Tap on "Paste data from clipboard"
4) Confirm the amount shown is what you agreed on and tap "Pay".
It may sound complicated, but it really isn't. My 9 year old generates invoices all the time using BlueWallet for chores he does around the house. We agree on a dollar value, he generates the invoice and show me a QR code on his screen. I scan it with my Phoenix wallet, make sure the little turd didn't overcharge me and then I hit "Pay".
Need a little motivation?
I'll send $5 USD to the first 3 lightning invoices that are pasted in this thread. Make sure to invoice them at $5 otherwise I won't pay. No strings attached. It just blows my mind we're not using this as the main means of payment on MPGH and that I couldn't find any threads on this topic.
Take care and be safe!
NOTE: Do your own research! Never take advice about crypto from anyone without using reputable sources to research it yourself. This is not for making money, it's simply a better payment mechanism.
I don't post often but have used MPGH for a few years now to buy small ticket items like licenses or game gift cards. I ONLY pay with Bitcoin and Ethereum and seek out sellers that accept it as a payment method. But as others no doubt find, using Bitcoin (even though my favourite crypto) is expensive, slow and I have to use mixing services to not expose my addresses and holdings. So how do we overcome this issue? EASY!
Enter the "Lightning Network"
Bitcoin is a permanent ledger that stores every transaction between parties in an immutable decentralised way. This can be fantastic, however not of much use when it comes to buying small ticket items. It's slow and costly and there is no value to store this transaction. A second layer was built on top of Bitcoin called the Lightning Network. I have used the Lighting network for about 9 months now to pay for many different things - it's practically instant, transactions cost less than 1c, it doesn't expose your Bitcoin addresses and the Android client I use even runs behind Tor.
How does it work?
Both the buyer and seller must have a Lightning Wallet installed and you must already own some Bitcoin. The apps are available in their respective stores:
Android Play Store: Phoenix Wallet by ACINQ
iOS App Store: BlueWallet by BueWallet Services
(Several companies are actively working on the wallets and protocol. Quite a few wallets have been released, but I personally just use the two above.)
SECURITY: When you install the app, it's going to generate a 12 word secret key for you. TAKE NOTE OF THIS BUT DO NOT STORE ONLINE. If anyone sees this, they can steal all your money. You will also need these same 12 words to RESTORE your Lighting wallet if you lose your mobile device.
The Lightning network works by creating channels between buyers and sellers. If there is no direct channel, it's smart enough to automatically find a path between you and them. To get your own channel you need to deposit a tiny bit Bitcoin into a unique address the wallet will generate - this is called FUNDING a Lighting channel which is necessary to create the channel. At any time you can withdraw your Bitcoin back on-chain again to a standard Bitcoin address when you need to.
If you're a BUYER, make sure to put enough Bitcoin into the channel to last you a while. Personally, I deposit about $20 at a time. (I originally put in $100 and it's worth $200 now with Bitcoin's recent run!!)
If you're a SELLER, you just need to deposit enough to fund the channel creation. Probably less than $5.
How do you actually use it then?
After you have followed the in-app instructions, deposited some BTC into your Lighting wallet address and it shows the deposit, the channel has likely been created and you're ready to go.
In the Lightning app the Seller simply enters, in dollar value, the price for the items they're selling and generate an INVOICE. Copy/paste this string to the buyer. The Buyer then copy/paste this string into their Lightning wallet. It'll show them the total amount in dollars and they hit PAY. Seconds later the Seller will have the money.
Steps for Phoenix Wallet - SELLER
1) Tap on "Receive"
2) Tap the little "Edit" icon
3) It'll take you to a "Edit my invoice" screen. You can change the "Amount" drop down to USD (if it isn't already) and type in how much. Tap on "Create Invoice"
4) Now tap the "Copy" icon and paste the string to the Buyer.
Steps for Phoenix Wallet - BUYER
1) The Seller will give you a long string (it starts with "lnbc"). This is the invoice they generated. Copy this string.
2) In the Phoenix app, tap on "Send".
3) Tap on "Paste data from clipboard"
4) Confirm the amount shown is what you agreed on and tap "Pay".
It may sound complicated, but it really isn't. My 9 year old generates invoices all the time using BlueWallet for chores he does around the house. We agree on a dollar value, he generates the invoice and show me a QR code on his screen. I scan it with my Phoenix wallet, make sure the little turd didn't overcharge me and then I hit "Pay".
Need a little motivation?
I'll send $5 USD to the first 3 lightning invoices that are pasted in this thread. Make sure to invoice them at $5 otherwise I won't pay. No strings attached. It just blows my mind we're not using this as the main means of payment on MPGH and that I couldn't find any threads on this topic.
Take care and be safe!
Originally Posted by AlphaCatalyst
