With so many Lightning Wallet options out there it can be tough for those wanting to just get started quickly. Worse still, lightning network wallets can operate very differently from one another with some running a stripped down lightning node right on your phone and others having complete control over your funds.
So today we’re going to quickly look at how lightning network payments work, what makes some of the best wallets out there good and what really popular lightning wallet you should probably avoid.
Contents
What Is The 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 as it’s often called allows for instant, near zero fee, high volume payments all without having to involve trusted third parties like banks or payments processor like Visa or Master Card.
How Lightning Wallets Work
In order to send and receive Lightning payments you need a Lightning wallet that connects to a Lightning Node. This node can be owned and run by you or it can be owned and run by a centralized third party company.
Depending on who owns these lightning nodes, it changes how the app works and how private and secure your experience is. Generally, there are two main options:
1. Privately Run Lightning Node
Lightning wallet apps like Phoenix or Bluewallet allows you to run your own Bitcoin Lightning Node locally on your phone. Bluewallet and Zeus also allow you to remotely connect to your own home node, meaning you can remotely manage it as well as send and receive Lightning payments using it.
Managing your own node and its lightning channels is the most private and secure way of using the Lightning network as it’s your node, running your code and all under your control. It also means third parties have no access or visibility to the lightning network transactions you make.
The down side is that this is more technical as the user must own, setup and maintain their own Lightning Node. This also means they have to manage their own Lightning Channels and put up their own bitcoin as liquidity in those channels.
To help with this complexity, many lightning wallet apps are also allowing you to run your own node locally on the device, whilst automatically creating and managing the channels for you. While this isn’t as private, it’s still very secure and is a good balance especially for beginners.
2. Third Party Lightning Node
Lightning wallet apps like Muun or Wallet of Satoshi allow you to connect to Lightning Nodes that are owned and operated by other third parties. While this makes it even easier and quicker to setup, you lose all privacy and security as they can see all your transactions and balance.
Best Bitcoin Lightning Wallets
All of our best lightning wallets are self custodial wallets. This means that you alone hold your Private Keys and have full control over your funds. Many of them also allow you to open your own payment channel or do it for you automatically. Certain wallets allow you to buy bitcoin inside the app and most support QR code scanning to send and receive payments too.
Bluewallet
- Fully Open Source Software (FOSS) with a simple and modern UI
- Support for both Android and iOS devices as well macOS desktop too
- Supports both Lightning and Bitcoin payments
- Huge range of other features including hardware wallet support, LndHUB, LNurl, Mixers, Coin Control, Multisig and more
- Play Store Stats: 100K+ downloads and 3.9 stars from 3,500+ reviews
Bluewallet is one of the most feature rich, all encompassing lightning wallets you’ll find. It’s non-custodial and allows you to create lightning wallets that connect back to your own or someone else’s LndHUB enabled lightning node.
While this is a bit more technical, as you have to run your own full node and LndHUB, it means you get the maximum amount of privacy and security protecting your sats. Bluewallet used to host its own Lndhub.io lightning node, but this was unfortunately shut down on the 31st of May 2023.
LndHUB is a program you run on your own full node that allows other people to create lightning wallets on it, just like a customer might create a new bank account at a bank. The Lightning wallet starts with a 0 sat balance and is totally separate to your nodes main wallet (the bank vault).
You can deposit, withdraw, send and receive funds through the Lightning wallet and you can have 1, 10 or 100,000 Lightning Wallets (customers) all open up an account at your node. If you were to liken it to a bank the analogy would go something like this:
- Lightning Node = Bank Branch with your Nodes wallet being the bank vault (liquidity)
- LNDHub = Customer Accounts software
- Lightning Wallets Linked To LNDHub = Customers opening accounts at your Bank
It’s at the top of our list as it’s not only a simple and powerful lightning wallet, but it has a huge number of features that you can learn about and use as your knowledge of lightning and bitcoin in general increases. These are things like multisig vaults, watch only wallets, fee and transaction costs control or even batch transactions.
It also strongly promotes full self custody, as that’s literally the only option in the app, which is what Bitcoin is all about. If you’re just starting out though, there are other apps below that while easier, don’t give you as much security.
Phoenix Wallet
- Fully Open Source Software (FOSS) with a simple and modern UI
- Support for both iOS and Android
- Supports both Lightning and Bitcoin payments
- Good fee estimation and innovative new implementations such as channel splicing
- Automatically manages opening new Lightning channels for your
- Play Store Stats: 50K+ downloads and 4.5 stars from 600+ reviews
Next up is Phoenix Wallet, which is a non-custodial wallet with a full, self contained Lightning node on your mobile phone. Phoenix is built by ACINQ who not only runs one of the largest and best interconnected lightning nodes on the planet, but also created and maintains the Eclair Lightning code implementation.
Phoenix is super fast and super simple. Under the hood it’s using some of the most cutting edge lightning network features such as the recently built channel splicing in their 2.0 app update. This allows for trust less swaps along with full control on your inbound liquidity, all inside a single dynamic channel.
While it does run a full lightning node in your pocket, it should be noted that ACINQ still knows the final destination and amount of all ln payments made using Phoenix. Again, this is simply a security trade off because you’re not fully managing your own node. This makes using the app much easier as ACINQ is automatically creating payment channels from them to your phone. The downside is they can see all your transactions.
Muun Wallet
- Fully Open Source Software (FOSS) with a simple and modern UI
- Support for both iOS and Android
- Supports both Lightning and Bitcoin payments with 2-of-2 multisig protection
- Play Store Stats: 100K+ downloads and 4.5 stars from 1,700+ reviews
Muun Wallet is a non-custodial wallet, but it only allows you to connect to and use their Lightning Node, meaning Muun has full visibility of all your transactions and balance. They also employ a rather unique 2-of-2 multisig wallet where they hold 1 of the keys and you hold both.
This allows for what they call “warm” storage, where they can collaboratively sign a transaction with you at any time, but don’t have enough keys to spend your funds. This non custodial lightning wallet is simple, but powerful and even has support for sending funds directly to certain hardware wallets.
For those not overly concerned with privacy or that don’t need the utmost security, Muun is a great option that also claims to have a special Mempool based fee estimator to help stop you from overpaying on transaction fees.
Zeus Wallet
- Fully Open Source Software (FOSS) with a simple and modern UI
- Support for both iOS and Android
- Supports both Lightning and Bitcoin payments
- Play Store Stats: 10K+ downloads
Similar to Bluewallet, Zeus Wallet is a non-custodial wallet that allows you to create a full, self contained Lightning node on your mobile device. It also allows you to connect to and remotely manage your own privately run node at home too.
If you have it create a lightning node on your phone, you can then open channels to other nodes on the network or to their Olympus node if you prefer. This means if you know what you’re doing you can get excellent privacy and security even if you’re running the lightning node on your phone.
While Zeus is an excellent and fast growing ln wallet, it’s not quite as feature rich as Bluewallet yet, but it’s getting there. We also love their new branding redesign and simple user interface.
Wallet Of Satoshi, Not Recommended
- Closed source software with a simple and modern UI
- Support for both iOS and Android
- Supports both Lightning and Bitcoin payments
- Play Store Stats: 500K+ downloads and 4.1 stars from 2,300+ reviews
While Wallet Of Satoshi is one of the most popular lightning wallet out there, we’ve intentionally left it off our best of list. This is because it only allows you to connect to and use their Lightning Node and is also a fully custodial wallet. This means that you don’t have full control over your funds, they do.
They’re also not open source and don’t make their source code publicly available either, meaning users are putting a lot of trust in Wallet Of Satoshi when using it. We’d heavily recommend using one of the other lightning wallets listed above, as even something like Phoenix or Muun that isn’t amazing for privacy is still just as easy to use and gives you much better security.
Why Use A Lightning Network Wallet
Lightning wallets have a number of great features that has allowed Bitcoin to realize its original goal of being a peer-to-peer electronic cash. Benefits include:
- Instant Payments: Bitcoin transactions can take from 2 minutes to an hour to be fully confirmed, Lightning Transactions happen near instantly as no block confirmations are required. This allows Bitcoin to be used for day to day transactions like buying lunch
- Micropayments: Lightning allows you to send funds as small as 0.00000001 bitcoin or 1 Satoshi without any custodial risk. This allows for novel types of business models like charging per minute for a podcast or paying for single use API access
- Scalability: Lightning allows essentially infinite scaling as the network capacity increases as more nodes are added, this means Bitcoin can scale up to billions of users
- Lower Fees: A common fee charged by major Lightning Nodes is around 0.05%. This means to send $100 costs just $0.05, far less than what Bitcoin, Visa or MasterCard charges
- Privacy: Since all payments sent and received between Lightning Nodes occur off the Bitcoin Blockchain, they aren’t recorded or viewable to the general public making it more private
Difference Between A Bitcoin Wallet And A Lightning Wallet
Bitcoin is the base layer on which the Lightning Network operates on top of. Both Bitcoin Nodes and Lightning Nodes use the bitcoin cryptocurrency, but a Lightning wallet sends and receives lightning payments between nodes using lightning channels, where as a Bitcoin wallet sends and receives bitcoin transactions on chain using the base Bitcoin network.
You use a bitcoin transaction to open what’s called a Lightning Channel between two lightning nodes. These are links out to other Lightning Nodes on the network. It’s these channels that lighting payments are sent and received over similar to how you send an email over your Internet connection to Gmail.
Lightning transactions can only be made over these lightning channels (to and from lightning nodes), while bitcoin transactions can only be made between bitcoin wallets via the base Bitcoin network.
FAQ
Are Lightning Wallets Safe?
Yes. We recommend that you only use a non custodial wallets as this ensures you always have full control over your funds and can safely access them . This does mean you are responsible for backing up your wallet, but just like with a non custodial bitcoin wallet, this is a small one time action that means you’re always safe from third parties freezing or stealing your funds.
How Do I Withdraw Money From My Lightning Wallet?
To withdraw your money from a lightning wallet you can either send it to another lightning wallet or use an exchange that supports lightning like Robosats to transfer it into fiat like USD. You can also close the lightning channel which will settle the channel with the other node and return your balance back to your bitcoin wallet.
Is Coinbase A Lightning Wallet?
Coinbase doesn’t currently support the Lightning network and thus, isn’t a lightning wallet. Their CEO did announce in 2023 that they are planning to integrate the lightning network into their platform, but so far we’ve seen little actual results.
Can I Send BTC To A Lightning Wallet?
No. While both lightning wallets and bitcoin wallets only send and receive bitcoin (BTC) as it’s the native coin of the lightning network, they are very different networks. Sending via a bitcoin wallet requires an on-chain transaction where as sending via a lightning wallet is simply an update of balances in a lightning channel. For more info, check out our full Lightning Network explainer piece.
How Do I Set Up A Bitcoin Lightning wallet?
Setting up a lightning wallet is quick and easy. Simply download one of our best rated apps above from your devices app store (make sure it’s the legitimate one as there’s a lot of fake ones) and it will automatically create your wallet for you. From here you can generate a lightning invoice, load it up with funds and then use it to send or receive lightning transactions.
