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The Lightning Network is a second layer protocol that enables new functionality and efficiency within the Bitcoin ecosystem. This off-chain solution introduces private payment channels that enable users to send and receive payments without adding congestion to Bitcoin’s blockchain. Only once the channel closes, the transactions are sent to the blockchain. In this way, the Lightning Network plays a vital role in large scale adoption.
Lightning Network transactions are both faster and cheaper to send. Additionally, the Lightning Network now has over two years of Beta testing under its belt. Recently, developers removed the channel limits via an update named “Wumbo Channels.” As this scalability solution is now more popular than ever, it’s important to understand what wallets permit you access to this unique off-chain ecosystem.
Custodial vs. Non-custodial?
There are currently two types of wallets in the blockchain sector, custodial and non-custodial. The difference between the two is simple. You hold your Bitcoin keys with a non-custodial wallet. Consequently, non-custodial wallets are considered a better option for anyone seeking to hold large amounts of Bitcoin.
However, if you are looking to trade small amounts of Bitcoin frequently, you may find custodial wallet options are better suited to your needs. For the most part, these wallets are secure, but they can be tempting targets for hackers because they store large amounts of crypto from various users.
Software or Hardware?
You will want to consider if you want to use a hardware wallet option or a Dapp (decentralized application). Dapps are the most popular option because they are quick to set up and free to download. Hardware wallets utilize a Dapp but include a device. Software-based wallets are a suitable option for those who don’t hold a significant amount of Bitcoin for long periods of time.
If you are HODLing your Satoshis, your best bet is a hardware wallet. However, there is no hardware wallet option available for Lightning Network users at this time. Luckily, Ledger announced in May via a Tweet that “Lightning Network is on the Horizon.” So until the market provides a hardware solution, Lightning Network users must rely on software options. Here are the best choices for 2020.
The Breez Wallet is an open-source non-custodial wallet that provides users with a simplistic interface. Anyone can navigate through the platform and send and receive Lightning Network payment with ease. Currently, Breeze is available as a free download on both Apple and Android devices.
Breez makes the top of the list because it’s non-custodial, and it’s really easy to set up. The entire platform utilizes a Neutrino-based light node to interact with the off-chain protocol. Impressively, users can start receiving payments after completing a single on-chain Bitcoin transaction. The wallet allows you to easily store your contacts and pay friends just by sharing a link to them. Notably, developers hope to add NFC technology to the platform in the coming weeks.
Phoenix Wallet by ACINQ
The Phoenix Wallet by ACINQ is an Android-based Dapp that provides more advanced features than the competition. This platform is an open-source non-custodial wallet option that continues to gain popularity in the market. It’s considered one of the best options for new users because it requires zero setups.
Users can send and receive payments in seconds. You can also choose to backup your wallet to keep your holding safer. You will need to provide your email for this feature. Nicely, developers included support for QR code payments so you can save time when in the checkout line.
Blue Wallet is another easy setup option that new users enjoy. You can create a lightning wallet with zero configurations using this platform. What makes the Blue Wallet unique is that you can switch its setup from custodial over to non-custodial. You can connect the wallet directly to your own Lightning Network payment channel and enjoy the best of both worlds. The wallet integrates the Electrum Personal Server (EPS), ElectrumX, or Electrs to accomplish this task.
Another awesome feature found in the Blue Wallet Dapp is direct access to the Lightning Network Marketplace. The Lightning Network Marketplace is a portal where users can access a plethora of Lightning Network-related services and features. For example, you can buy/sell or trade on exchanges, spends on stores, can tip to your friends, can play lightning games, and pay retailers directly from your lightning wallet.
The main thing to consider when you get this wallet is your channel setup. If you are ok with the centralized setup provided in the initial setup, you can start using the wallet the instant it downloads. However, if you want a more secure option, you want to connect directly to your own channel.
Electrum is another popular Lighting Network wallet option in the market. This open-source platform is known for its security and advanced features. Electrum introduces a combination of technologies to bridge the gap between hot and cold storage methods.
This feature-rich light wallet is one of the most secure software wallets available. Additionally, the protocol continually indexes the Bitcoin blockchain to improve responsiveness and transaction times. Best of all, Electrum is free to download and only takes seconds to set up.
Another amazing feature is the ability to export your private keys and use them with other Bitcoin clients. Interoperability is one of the most important features of next-gen blockchain platforms. Interoperability helps to promote innovation in the market.
The éclair wallet was one of the very first mobile Lightning Network wallet options available to users. This platform helped usher in the era of mobile Lightning Network platforms. This non-custodial option is only available on Android operating systems at the moment.
Éclair is packed with features to make your Lightning Network experience better. For example, the wallet utilizes rotating deposit balance addresses. This strategy makes it harder for people to track their Bitcoin deposits. There have been cases where hackers discovered the owner of large Bitcoin accounts and targeted them. Éclair removes this concern.
Additionally, Éclair developers published their source code so the community can audit its validity. In most instances, Open source platforms are more secure due to this process. The wallet simplifies fee calculation as it provides fee suggestions based on current network conditions.
Fully Noded may be the most advanced wallet option available to Lightning Network users today. This platform comes from the Japan-based startup Nayuta. Unlike the competition, Fully Noded runs a full Bitcoin node rather than just a light client. In this way, the wallet is a member of a select few mobile self-sovereign options available today.
You want to utilize a full node because it’s the only way to conduct peer-to-peer transactions in a trustless manner without intermediaries truly. Amazingly, starting a full node used to take hours. Fully Noded makes it possible for anyone to operate a full node.
Nicely, developers leave the full node functions as an option. For most practical uses, the light client will work just fine. Interestingly, the wallet started as a fork of the project ABCore. ABCore specializes in making it easier to run a full node on Android devices.
BLW is an autonomous Lighting Network wallet that contains a standalone Bitcoin and Lightning node. The interface for this platform provides you with more control and security than most options in the market. AS a non-custodial wallet, your private keys remain in your control.
BLW has a published and audited source code. The platform also provides you with more protection via biometric fingerprint support. You can also save local channel backups and limit Lighting Network fees to fit your particular requirements.
Nicely, BLW includes all the most popular features you would expect. Additionally, you enjoy added functionality in the way of extra compatibility with Bitrefill’s Lightning services. The combination of an easy setup, navigation, and security make BLW one of the most popular options available to users.
Wallet of Satoshi
The Wallet of Satoshi is a custodial mobile wallet available on both iOS and Android operating systems. This wallet is another great option for new Lightning Network users. The platform features an easy-to-navigate interface that provides you with access to all the most relevant details needed to manage your account.
Another nice feature of this wallet is that you don’t need to set up any payment channels. The software connects you to channels already designated for that purpose. In this way, the Wallet of Satoshi removes all the technical barriers associated with Lightning Network use. The Wallet of Satoshi also has a merchant finding beneficial features. Users can search for LN-enabled merchants in their area. Just this feature alone is enough to put this wallet on this list.
The downside of this option is the fact that it’s a centralized service. The platform is who holds the private keys to your Bitcoin. Consequently, if something happens to your Bitcoin, you may not be able ever to recover the lost coins. As such, large fund holders will steer away from custodial wallets unless there are enterprise-level options designed to meet a large clientele’s demands.
The Best Bitcoin Lightning Network Wallet Options for New Users
Now that you have some insight into the best Lightning Network wallet options available, you are ready to do your part to help support this monumental effort to solve Bitcoin’s scalability concerns. Every day the Lightning Network achieves new milestones. You can expect this network to play a pivotal role in the mainstream adoption of Bitcoin moving forward.