Theory and practice: how to choose a wallet for the Bitcoin Lightning Network

Which wallet to choose for Bitcoin Lightning Network?

17-04-2019   Learning Lightning

Innovative payment protocol Lightning Network is gaining more and more success. Continuing to develop rapidly, the technology demonstrates the functionality and reliability of the Bitcoin Lightning Network. The central perspective of LN is the massive adoption of Bitcoin and the embodiment of Satoshi Nakamoto's concept of p2p money that can be transacted instantly with low fees.

The Lightning Network provides an alternative for users when the Bitcoin blockchain becomes overloaded, solving the scaling problem. The solution allows you to make transactions without delays and large fees, and users are attracted by the speed and ability to simplify operations for early crypto users.

However, the development of the network consists not only of an increase in the number of users, nodes, channels, and network capacity. An essential fragment of the infrastructure is user cryptocurrency wallets. As the community grows, developers are generating new, simple and difficult to use wallets that allow everyone to start using Bitcoin right now.

Choosing the best Bitcoin Lightning Network wallet can seem like a daunting task often faced by members of the crypto community. There is still no single wallet that contains all the options and requirements of users with different goals and levels of training. This problem is rightly called one of the most important, delaying the mass adoption of the Lightning Network. When you have decided on your strategy — trading, investing or storing, — you will surely ask yourself the question: which wallet to choose? To help you figure it out, we tested the top 8 wallets that are being talked about in the community and prepared a review.

Types of wallets

The choice of a convenient bitcoin wallet depends on various factors: what device you plan to use, what level of security you need, whether you allow a third party to own your funds, whether you are an experienced user and others. Let’s consider the basic types of wallets.

PC Wallet

Desktop wallets are the original way to store crypto. GitHub presents an excellent selection of reliable PC wallets. Usually, developers recommend using "native" wallets for their coins. However, do not forget that PC wallets still have an average security level precisely from the moment the PC connects to the Internet.

Mobile Wallets

Undoubtedly, the most popular type of crypto wallet. Mobile wallets are great for storing small amounts in crypto. Being the most practical directly due to mobility, they still have a low level of security, since they use cellular to connect to the Internet.

Mobile wallets, for the most part, use the technology of simplified payment verification (SPV), since the entire blockchain is continually growing and already occupies several gigabytes. In the case of mobile crypto wallets, access to only a part of the blockchain is sufficient.

Hard Wallet

Hardware wallets allow you to keep the crypto in a cold store. It means that your coins will be stored offline. It is the most expensive type of crypto wallet available (the average price for a reliable device is $70–100, but there are also more expensive options). For large crypto investors, this is the safest way to store.

Paper Wallet

Yes, that means what you thought. Paper wallets represent cold storage without the need to buy a hardware device. It is a printout of private and public keys and a 3d barcode. You can send and receive crypto directly from your wallet using a barcode. The disadvantage is distinct: you lose your coins if you lose your paper wallet. The printout can be stolen, burned in a fire, get wet in a backpack in the rain, be eaten by a dog along with a thesis, [*add your variants in the comments*].

The first crypto phones

Samsung Galaxy S10

The new flagship introduced in February contains the Blockchain KeyStore and crypto wallet. The presence of built-in storage for private cryptocurrency keys in the model of the South Korean technology giant was officially confirmed in a press release and demonstrated at a presentation in Barcelona. The storage with the hardware component is focused on mobile blockchain services of private keys. The built-in crypto wallet will support Bitcoin, Ethereum and Enjin Coin and Cosmo Coin tokens to start. As reported, the flagship will also have the possibility of contactless payment of cryptocurrency. The new smartphone will cost about $925-1,250 (depending on the store and version — S10, S10e or S10 Plus).

Exodus 1

In February 2019, Exodus and HTC opened a sale of a crypto phone Exodus 1 with a built-in crypto wallet Zion. With this wallet, you can view your crypto assets (cryptocurrencies, ERC-20 tokens and current exchange rates), make transactions (send, receive), view ERC-721, backup your wallets. Also, the phone is compatible with the updated Opera browser, which allows combining microtransactions directly on websites. The price of the device is $699. Unfortunately, we don’t know a single user who has bought or at least tested this gadget, so we can’t give more details, such as whether Zion supports operations in LN.

Finney, Sirin Labs

Last year, Sirin Labs also presented its phone with a built-in crypto wallet. Finney costs $1,000. The company claims that this is the first blockchain phone with integrated cold storage and a dapps (decentralized applications) hub. You can order a phone online or at a few points of sale in the world.

However, it is worth noting that giving smartphones cryptographic functionality and the inclusion of crypto wallets are hugely important for the entire crypto industry, as it potentially leads to providing easy access to the crypto to millions of users.

Which wallet to choose for Bitcoin Lightning Network?

Having a brief idea of the different types of wallets, we will focus on specific examples of crypto storage, which are suitable for practical application of the Lightning Network technology.

Attention: we carried out the practical part of our research on the Android device issued in 2016. We used small transactions in the equivalent of $1–5 for the experiment. The essence of the experiment is to test the most popular wallets. Algorithm of testing: install the wallet on the phone, set up it, recharge the account with an on-chain transaction, open the Lightning Network channel, perform the transaction via LN. The specialist who experimented has a low level of technical training, but some experience in using the Lightning Network.

Bitcoin Lightning Wallet

“This app features a standalone SPV Bitcoin node with a fully functional built-in Lightning node.”

One of the most functional and powerful open-source SPV-wallets for Android devices. Bitcoin Lightning Wallet supports sending and receiving not only transactions in the Lightning Network but also traditional on-chain transactions in the main network.

BLW uses a system for storing information about lexemes: users can store channel backups and anonymously delay transaction returns.

The wallet is downloaded merely, easily configured: the interface is understandable and intuitive. The minimum amount for opening a channel is 300,000 satoshis, and the maximum is 16,777,215.

Another important aspect: BLW stores information without the use of third parties. That is, user funds are stored directly on the phone, which means that the application is resistant to censorship. No one can block your account or cancel your transactions. Only the user bears full responsibility for the safety of funds. You should also pay attention to the lack of a PIN code, but in the settings, you can enable fingerprint protection if your device supports this function. It is essential to know that in case of loss or damage to a mobile device, a mnemonic code consisting of 12 words can be used to recover funds. We tried, everything works :)

Download: Google Play, GitHub.

Eclair Wallet

“Eclair Wallet is a next generation, Lightning-ready Bitcoin wallet.”

According to users, the Eclair Wallet is considered one of the best and most convenient wallets available on the market today. The project positions itself as the most popular wallet for Android devices that supports the Bitcoin Lightning Network. It also allows you to create traditional Bitcoin addresses. French startup ACINQ, the leader in Bitcoin scaling, launched the first at that time LN mobile wallet in April 2018. In October of the same year, the team raised $1.7 million in investment.

Eclair is easy to configure even for inexperienced users. 24 words, PIN, check — and you can use it. The application immediately upon entry into it makes a backup. To receive a Lightning payment, you must first enable this feature in the settings. After this, the application congratulates that you can now receive payments through LN, informs you that it will monitor channels in the background and asks you to make sure that the phone does not remain without an internet connection for more than 2 weeks. OK, we will make sure. Channel capacity should be from 100,000 satoshis to 16,777,216.

Download: Google Play, GitHub.

BlueWallet

“Store, send and receive bitcoin with the wallet focus on security and simplicity.”

BlueWallet apps are available for both iOS and Android users. The developers focused on an intuitive interface, seeking to ensure the availability of cryptocurrency for inexperienced users. It is a practical wallet for simple and not requiring configuration Lightning-transactions, aimed primarily at beginners in the crypto. The custodial wallet is suitable for users who are willing to entrust a third party to keep their funds for the sake of simplicity and convenience. You can create a Bitcoin wallet or a Lightning wallet, as well as import an existing one using a mnemonic code, a private key or other means. Having created a Lightning wallet, you can immediately receive a payment by generating Lightning Invoice in the form of a QR or text code, which can be shared in any of the popular instant messengers, to another compatible wallet, or just by copying.

Download: Google Play, App Store, GitHub.

Denryu wallet

“Denryu Wallet is a simple Android wallet designed with the best Lightning Network user experience in mind by only activating the essential functions.”

Denryu wallet is an Android application that is also positioned as a beginner’s wallet, providing an environment for comfortable work with the Lightning Network. Denryu is a system for easy use of Lightning Network for receiving micropayments in bitcoin. In addition, Denryu suggests using their API to build unique lapps without having to worry about setting up and managing your node.

No specialized knowledge is required to start using. When installing, the application asks to put 3 checkboxes, indicating that you not only read the terms of use but also understand that if you delete the application or lose the device, you can lose coins. Also, the application reminds us that it is still a beta application so that bitcoins may be lost due to software bugs. “Use at your own risk.” In general, a prudent reminder, since many newcomers do not understand that they bear all the full responsibility for their coins on their own, believing that if they make a mistake, the service will have to return their funds on balance.

The mnemonic code consisting of 12 words is not shown immediately upon the first entry, but one can find them in the settings. After installation, the application offers to connect to Lapp and start receiving LN payments. The minimum amount for opening a channel is 12,583 satoshis, and the maximum is 16,777,215. To open a channel, you need to swipe to the left and scan the QR of the node. Unfortunately, we did not find another way. It is worth noting that this path was not too evident to us, and the newcomer will be completely confused and will soon abandon this venture. “But you could look at the FAQ in English or Japanese,” you can say. But the surprise: the FAQ link leads you to the blog on Medium, where we could not find answers to the questions. None. Not at all.

Download: Google Play.

Peach Wallet

“Peach Wallet is a non-custodial bitcoin wallet with an emphasis on Lightning Network micro-payments.”

The Lightning Peach team that created Peach Wallet is a part of Bitfury, a multidisciplinary blockchain company that is engaged in mining and developing software and hardware for working with Bitcoin blockchain. Open-source Peach Wallet compares favorably with others in that it is available for all the most popular desktop and mobile platforms. It was released in January 2019 among other tools presented for the development of the Lightning network: solutions for accepting payments, merchants and payment processing, for developers, as well as The Peach node.

To enter a wallet, you need to set up a node immediately: manually enter data using a guide in Google Cloud or scan the code by downloading the desktop application on the product site. The path is not easy. After downloading the desktop version, you need to create a wallet there, save the mnemonic, enter it for verification and wait for the end of synchronization, which, by the way, is faster than downloading the wallet. In general, this process did not end for us, because the application on the phone still could not scan either QR of our node or QR of their public LightningPeach node. Very sorry.

Download: Google Play, App Store, GitHub.

Spark

“A minimalistic wallet GUI for c-lightning.”

The Spark application provides connectivity to the node with the implementation of c-lightning from Blockstream. The application has particular popularity due to the possibility of customization and support of the Tor protocol, as well as simple settings. It allows users to run a fully validated Bitcoin node, c-lightning node, and Spark GUI at the same time. When you first log in, you need to configure the Spark server URL and API access key. You can also scan a QR code for setup. Like other wallets, Spark focuses on speed, security, and simplicity. It is worth noting that this is an off-chain wallet, the main goal of which is to make Lightning payments available for as many users of different platforms as possible (browser, mobile application, desktop client).

Download: Google Play, GitHub.

Wallet of Satoshi

“So Easy — your Mum could use it.”

Mobile application for iOS and Android devices. It is another zero-configuration fully custodial Lightning wallet that focuses on simplicity and the best UX and offers a convenient way to perform microtransactions. A distinctive option of this wallet is the possibility of buying bitcoin right inside the platform, replenishing a balance from accounts on the exchanges, as well as paying for goods and services through scanning a QR code. The Android application is still under development, which developers “loudly” warn us about when downloading. We think that this is the reason that while the wallet is not protected by either a mnemonic phrase or a PIN code. In the settings, you can log in using email to create a backup, but it does not add security.

“Happy Bitcoining!” — the application wishes us when we enter it. Create an invoice indicating the amount of payment is very simple and fast. When you try to create not Lightning invoice, but on-chain, a warning appears that funds will still be credited to Lightning balance, as well as necessary clarification that this is a one-way process and you cannot withdraw Bitcoin from Wallet of Satoshi. We do not know what the developers wanted to say; we did it. We tried a $1 Lightning transaction (transfer from Bitcoin Lightning Wallet to Wallet of Satoshi), which took just a few seconds. The repayment was just as simple. We copied the invoice in BLW, opened the WoS, it instantly offered to complete the transaction, recognizing the invoice in the clipboard. In this case, both applications remained online in the background, warning that they are awaiting a transaction. It is worth noting that when creating an invoice for an on-chain transaction, a commission of 0.3% is charged. Overall, the wallet is effortless.

Download: Google Play, App Store.

Electrum

“Secure, feature rich and trusted by the Bitcoin community since 2011.”

Electrum Wallet is a secure multi-sig wallet that has been operating since 2011 and is very well known in the crypto community. It is also compatible with hardware wallets (Trezor, Ledger). In October 2018, developers reported on the integration of SegWit functionality. At the time of the announcement, Electrum was processing about 10% of all transactions on the Bitcoin network.

When installing, the application offers to create a standard wallet, with two-factor authentication, a wallet with a multi-signature.

The configuration process includes the choice of options (we chose the standard), SegWit, recording and checking the mnemonic phrase, setting the PIN code. Unfortunately, the LN functionality in this wallet remains at the development stage, and this is for very experienced users at the moment. Therefore, we will wait for the official release of a full-fledged update, as it was not possible to complete the Lightning transaction since there is no possibility to open a channel in the application.

Download: Google Play, GitHub.

Bonus: a hardware wallet

Casa Node

It is a physical device for efficiently managing your bitcoin and Lightning nodes. The company also offers extensions for Google Chrome and Firefox browsers for interacting with websites with built-in Lightning functionality. The device does not require knowledge of additional technical information. The cost is $ 300.

The best wallets for Lightning Network

As a result, we saved three wallets for practical use in the future — Bitcoin Lightning Wallet, Eclair Wallet, and Wallet of Satoshi. These three wallets seemed to us the most simple, convenient, and most importantly intuitive, even for beginners in crypto. The comfort interface is a common feature of all three applications. What are the differences?

Among the three wallets, in our opinion, the most secure is Bitcoin Lightning Wallet. First, it is entirely custodial, and the security of your coins depends on you. Secondly, this is not a beta version, but a fully working application. Of course, we should always be wary of software bugs, but positive feedback and personal experience are still encouraging. By the way, an interesting note: some large crypto market operators recommend this particular wallet.

Eclair is a solid middle. A beautiful application with a delicious name, it is completely protected and fast. However, it stands out slightly comparing to the other two leaders, no matter how strange, but because of difficulty. Some actions inside the wallet are not obvious. Even taking into account the fact that we have been using this application for quite a long time, it is still inferior to BLW in the laconic interface.

As for the Wallet of Satoshi, it is so simple that any novice, mother, grandmother, humanist, cat, kettle can use it. The interface is resilient, but still, there is a problem of security. Moreover, the lack of a mnemonic phrase generally scares ordinary users. Nevertheless, we wish good luck to the developers, and we promise to test their product again after the final release.

After analyzing various wallets, snatching a few strands of blond hair while testing, we can conclude that the market already has enough offers of safe ways to store bitcoin in the Lightning Network. We have been waiting for low fees and the possibility of instant transactions for micropayments. And here it, the future, is already here: LN provides us with all these options. So, install, use and together — To the moon!