Guide
How to Use the Lightning Network: Choosing a Wallet and Sending or Receiving Bitcoin
The short answer: install a wallet and scan a QR
Using the Lightning Network is remarkably simple. Install a compatible wallet, scan the other party's QR code (invoice) to pay, or show your own QR code to get paid — that's basically all there is to it. Its biggest advantage is that you can send small amounts instantly and cheaply. That said, wallets differ based on who controls the private keys, splitting into custodial and non-custodial types, which changes the balance between security and convenience. To understand the fundamentals, it helps to first read What Is the Lightning Network?.
Key takeaways
- The workflow is "install a wallet → scan a QR (invoice) → send," and to receive you simply "show your own QR code."
- Wallets fall into two camps: custodial (a provider holds the keys) and non-custodial (you hold the keys yourself).
- Behind the scenes, "channels" and "liquidity" power payments, but more and more wallets are designed so users don't have to think about them.
- Lightning excels at small, instant payments, but custodial wallets carry provider risk, while non-custodial wallets place the responsibility of self-management on you.
The workflow, step by step
- Choose and install a wallet (pick from the custodial or non-custodial options described below).
- Fund your balance: deposit from on-chain, or build up a balance by receiving payments.
- Send: use your camera to scan the QR of the invoice the recipient presents, confirm the amount, and send. It completes almost instantly.
- Receive: specify an amount, display your own QR code (invoice), and have the other party scan it.
For how to use it in real payment situations (in-store, online, donations), see How to Spend Bitcoin.
How to choose a wallet (custodial vs. non-custodial)
| Type | Key management | Characteristics | Representative examples (neutral) |
|---|---|---|---|
| Custodial | Held by the provider | Easy to set up, beginner-friendly / you must trust the provider | Wallet of Satoshi, Cash App, Strike, etc. |
| Non-custodial | You manage them | High self-sovereignty / backups and other responsibilities fall on you | Phoenix, Muun, Breez, etc. |
The above are examples of real wallets, not endorsements of any particular product. Availability by region, supported features, and specifications can change, so always check each official website for the latest information before use.
- Custodial wallets are easy to set up because the provider holds your private keys, but you take on the risk of that provider failing, restricting access, or being hacked.
- Non-custodial wallets give you high self-sovereignty because you manage the keys (recovery information) yourself, but if you lose them, there's no way to recover your funds. For the principles of safekeeping, the Storage and Self-Custody Guide is also worth a read.
Channels and liquidity (a quick overview)
Lightning works by having participants open "payment channels" with one another, then exchanging small amounts many times within that channel and recording only the final result on Bitcoin itself (on-chain). The maximum you can send is governed by the channel's "liquidity." Many modern wallets automate channel management, so users can use them without paying close attention to any of this.
Benefits and cautions
- Benefits: fast and cheap for small payments, instant around the clock, ideal for tips or the cost of a cup of coffee.
- Cautions: custodial wallets carry provider risk, while non-custodial wallets place the responsibility for backups and liquidity management on you. For holding large amounts long-term, the basic approach is on-chain plus cold storage, not Lightning.
Frequently asked questions
Q. Custodial or non-custodial — which should I choose? A. If convenience is your priority, go custodial; if you want to manage your own keys, go non-custodial. It's easier to decide if you think of one wallet for small payments and another for storage.
Q. What is an invoice? A. It's a payment request in which the recipient indicates "how much they want to receive," represented as a QR code or a text string. The sender scans it to pay.
Q. Is it okay to keep a lot of money on Lightning? A. Lightning is designed for small, everyday payments. For holding large amounts long-term, the basic approach is on-chain cold storage.
Q. How much are the fees? A. They tend to be very low for small payments, but they vary depending on your wallet and channel conditions. Check the fee displayed before you send.
References and sources
- lightning.network (official): https://lightning.network/
- bitcoin.org — Lightning (glossary): https://bitcoin.org/en/glossary/lightning-network
- Bitcoin Wiki — Lightning Network: https://en.bitcoin.it/wiki/Lightning_Network
A note on investing
This article is for informational purposes only and is not investment advice. Bitcoin carries risks including price volatility, hacking, and loss. Make investment decisions at your own responsibility and only with money you can afford to lose. Tax rules and regulations can change, so always verify the latest information from official primary sources.
Sources
FAQ
- Custodial or non-custodial — which should I choose?
- If convenience is your priority, go custodial; if you want to manage your own keys, go non-custodial. It's easier to decide if you think of one wallet for small payments and another for storage.
- What is an invoice?
- It's a payment request in which the recipient indicates how much they want to receive, represented as a QR code or a text string. The sender scans it to pay.
- Is it okay to keep a lot of money on Lightning?
- Lightning is designed for small, everyday payments. For holding large amounts long-term, the basic approach is on-chain cold storage.
- How much are the fees?
- They tend to be very low for small payments, but they vary depending on your wallet and channel conditions. Check the fee displayed before you send.
This article is informational only and is not financial, investment, or trading advice. Prices are reference snapshots and may be outdated. Always do your own research.
