Ready to unlock the full potential of Bitcoin? Learning how to set up a Lightning Node is a one way ticket to a world of financial freedom and full self sovereignty. Whether it’s to use just for yourself or to go down the path of becoming a routing node so you can earn fees using the bitcoin you have, this is a great starters guide that will get you well on your way. First though, let’s just quickly go through a few definitions.
Contents
What Is The Bitcoin Lightning Network?
The Bitcoin Lightning Network is a decentralized network of nodes that sits on top of the base, Bitcoin Network. This Layer 2 network allows for instant, near zero fee, high volume micropayments all without having to involve trusted third parties like banks or payments processors like Visa or Master Card.
What Is A Bitcoin Lightning Node?
A Bitcoin Lightning Node (also sometimes called a Lightning Network Node or a LN Node) is just a computer that runs special software that allows it to connect to the Bitcoin Lightning Network. It can send and receive Lightning payments as well as route other peoples Lightning payments.
For example, you could use your Lightning Node (and Lightning Wallet) to purchase a coffee if the store accepted Lightning payments.
How Does The Lightning Network Work?
The Lightning Network is made up of thousands of privately owned nodes and wallets. Each node opens one or more Lightning Channels with other nodes allowing them to send and receive payments to each other near instantly.
These channels are linked back to the Bitcoin Network with real Bitcoin Transactions which lock up a certain amount of bitcoin funds in a two-party, Multisignature Bitcoin Address. While the details behind these channels can get quite technical, it enables the network to route payments from one node to another just like your data gets routed through the Internet.
To an average user, they can buy a coffee and pay for it with their Lightning Wallet all without using any banks, payment processors or other trusted third parties. The payment is routed from their custodial Lightning Wallet, through various Lightning Nodes and onto the coffee shop which receives their bitcoins instantly.
Lightning Node Requirements
Hardware Requirements
This can be $0 if you use an already owned, old computer all the way up to thousands of dollars or more if you use custom built node solutions or newly purchased high power computers for really serious lightning node runners that want to have dozens or hundreds of payment channels and route thousands of payments.
So to give you a quick and dirty answer we’ll separate this into two sub sections. First, for those that are just average Joe Shmoe home users that want to use their lightning node just for themselves, but have a decent user experience without horrific lagging and slowness we recommend:
- A modern CPU like a Raspberry Pi 4, 5, Intel N100, Intel N250 or even Core i3/i5
- At least 8GB of RAM, preferably 16GB
- At least a 2TB SSD, this allows for years of use as the Blockchain size grows. Do NOT use a HDD!
- A good, reliable and efficient power supply (PSU)
- Good cooling to ensure thermals are always cool and stable
- While you can use WiFi, a physically connected Ethernet will always be better
If you’re wanting to build a fully dedicated routing node that has dozens of channels and is explicitly built to route payments and be profitable then you’ll need more powerful hardware. Here you should preference 16GB+ of DDR4 or DDR5 RAM and a faster CPU such as the N250, Core i5 or even Core i7 depending on how big you’re wanting to go.
Do keep in mind though that profitability is not easy when operating a routing node, and if you spend tons on killer hardware it can totally blow out your budget and mean it’ll take years to recoup your upfront costs. Our recommendation is to ensure you know your hardware and preference the second hand market to get good, fast, efficient hardware at cheap prices.
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