The Lightning Network is a second layer protocol that enables fast and cheap Bitcoin transactions. It works by creating payment channels between users, who can then exchange bitcoins off-chain without broadcasting to the main network. When the channel is closed, the final balance is settled on the blockchain. The Lightning Network is seen as a solution to the scalability problem of Bitcoin, as it can handle millions of transactions per second with minimal fees.
One of the challenges of using the Lightning Network is choosing a suitable wallet that supports it. A Lightning wallet is a type of Bitcoin wallet that can open and close payment channels, as well as send and receive bitcoins through the Lightning Network. There are different types of Lightning wallets, such as custodial, non-custodial, mobile, desktop, web, and hardware. Each type has its own advantages and disadvantages, depending on the user’s needs and preferences.
Custodial and Non-Custodial Wallets
Custodial and non-custodial wallets are two types of crypto wallets that differ in how they store and manage the private keys of your crypto assets. A private key is a secret code that allows you to access and spend your crypto on the blockchain.
A custodial wallet is one where a third-party service, such as an exchange or a platform, holds your private key for you. This means that you do not have full control over your crypto, but you also do not have to worry about losing or forgetting your private key. Some examples of custodial wallets are Coinbase, Kraken, and Ceffu.
Non-Custodial LN Wallets
A non-custodial wallet is one where you have sole control over your private key, and therefore your crypto. This means that you are responsible for keeping your private key safe and secure, and that you can access your crypto from any device. Some examples of non-custodial wallets are BitPay, Breez, and Exodus.
Both custodial and non-custodial wallets have their pros and cons, depending on your needs and preferences. Plaguedeath, a user on BTT summarized this:
“Custodial is always the easy way to use since you only need to creating an account and it’s ready to use. While non custodial needs you to open a new channel, fund it etc that looks more technical. But it we talk about security, non custodial is always secure than the custodial one. In custodial, you’re relying on someone else channel, if the owner want to close the channel, you will lose your coins.”
Some of the most popular and recommended Lightning wallets are:
Wallet of Satoshi
This is a custodial mobile wallet that is very easy to use and does not require any technical knowledge. It automatically opens and manages payment channels for the user, and allows them to send and receive bitcoins instantly and for free. However, the downside is that the user does not have full control over their funds, as they are stored by a third-party service. Wallet of Satoshi is available for Android and iOS devices.
This is a non-custodial mobile wallet that is open source and user-friendly. It also takes care of opening a payment channel for the user, but gives them more control and security over their funds. Breez has some extra features, such as a digital cash register, a podcast player, a marketplace, and support for multisig transactions. Breez is available for Android and iOS devices.
This is a non-custodial desktop wallet that is one of the oldest and most trusted Bitcoin wallets. It supports the Lightning Network through a plugin called Lightning Electrum, which allows the user to create and manage their own payment channels. Electrum also has other features, such as cold storage, hardware wallet integration, and custom fees. Electrum is available for Windows, Mac, and Linux operating systems.
This is a non-custodial desktop and mobile wallet that supports multiple cryptocurrencies, including Bitcoin and the Lightning Network. It has a sleek and intuitive interface, and allows the user to easily switch between on-chain and off-chain transactions. Exodus also has a built-in exchange, a portfolio tracker, and a 24/7 customer support. Exodus is available for Windows, Mac, Linux, Android, and iOS devices.
This is a non-custodial desktop and mobile wallet that is designed for power users who want more customization and flexibility. It allows the user to create and manage multiple payment channels, as well as connect to their own Bitcoin node. Zap also has a feature called Strike, which enables the user to make Lightning payments with their debit card or bank account. Zap is available for Windows, Mac, Linux, Android, and iOS devices.
These are some of the best Lightning wallets that can help you enjoy the benefits of the Lightning Network. However, keep in mind that the Lightning Network is still in development and may have some bugs and risks. Therefore, it is advisable to only use small amounts of bitcoins and do your own research before choosing a wallet.