Now there’s no excuse to get started with lightning
How to use bitcoin to its full potential: Take advantage of near instant and almost free bitcoin transactions with Umbrel OS.
The first time you use the lightning network you’ll be blown away at how quick you can send bitcoin for next to no fees. Especially if you’ve heard the old and tired critique that “it can’t scale as a payment network” or “VISA processes 60,000 transactions per second to bitcoins 7”. With lightning we’re talking about billions of transactions per second so it really opens up a lot of possibilities for bitcoin in the future. However, running a lightning node usually involved spend hours or days pulling your hair out troubleshooting in the command line and setting up a linux server, this is until recently.
The best thing you can do for your privacy, security and to support the bitcoin and lightning networks is to run your own node. In the past year or two numerous providers have begun offering turnkey node services including Casa, Nodl, Raspblitz and MyNode.
Probably the simplest and cheapest option though is running Umbrel on your own Raspberry Pi 4. The UI is intuitive, clean and perfect for the average bitcoin user who just wants to get started with lightning. While functionality is limited at the moment as the project is only newly formed it is regularly being updated with much more on the way.
Several standout features include Tor configured by default for all services which usually would be a major headache to setup correctly, local network and onion link access are automatically available on startup. Umbrel also comes with an app store which has a number of handy bitcoin and lightning apps that really expand functionality beyond what the average user would need. Also goes without saying you have full custody of the wallet and the Umbrel OS software can be verified online.
Run Umbrel OS on a Pi 4
Setup is incredibly easy and there’s really no excuse for not getting started and supporting the network.
- Visit the Umbrel site: https://getumbrel.com/
- Scroll down to the “Install on a Raspberry Pi 4" section and click on the “how to install” button. This will popup a simple 10 step start to finish guide that even a 10 year old could follow.
Few things to note though:
- Definitely get at least the 4GB Raspberry Pi 4, not sure if the 8GB version really makes a difference for the average user but less than 4GB may not be enough under load.
- As Umbrel suggests get the official Pi 4 power supply or you may have issues.
- You will also need a microSD USB card reader to flash Umbrel onto the SD card or a microSD to SD adapter if you have a SD port on your computer.
- Don’t partition or create an empty volume on the SSD before plugging it in as Umbrel will sort all this out, just place it straight into the SSD enclosure and plug it into the Pi via the USB 3.0 port.
- Be sure to get a reasonable case or at least some sort of passive or active cooling as the Pi will likely throttle and take forever on the initial sync without it. The Flirc case in the Umbrel guide or the Argon Neo will keep the temps under 60C without any noise.
- Umbrel OS is built off of Raspberry Pi OS so if you want to check the temps of your Pi you can do so using the built in vcgencmd utility. Just SSH into your Pi using the command “ssh email@example.com” then input your Umbrel password. For windows users you can access SSH through Powershell.
- Full Umbrel troubleshooting guide for more tips: https://umbrelinfo.gitlab.io/troubleshooting.html
The initial sync of the bitcoin blockchain will take 3–7days depending on your internet connection, everything is going through Tor so it does take some time. This sync is one time only though and once you’re done you’ll have full privacy and security of your bitcoin on both the main chain and lightning plus you’ll be helping to keep the network secure and decentralized.
Send some bitcoin to the wallet and visit the app store from your Umbrel dashboard, don’t worry all the apps are free! I’d recommend beginning by installing Mempool which is a great visualizer for the bitcoin main chain, it makes it really easy to see congestion and current fee rates to stop you overpaying for transactions. For lightning I’d recommend installing Ride The Lightning and ThunderHub, both have overlapping features but also several unique to each other so it’s worth installing both and having a look around.
Find good nodes to open channels with
Before you can make a payment using lightning you will need to open a channel to another node so your payment can be routed through the network. There are two types of channels public and private, they essentially operate the same however public channels are publicly visible to everyone on the network. Umbrel will keep your IP address hidden through a Tor onion address if you do open a public channel so no need to worry about your home IP being exposed. For most users who just want to casually use lightning to buy things and maybe receive payments from friends or family every now and then you’re better off sticking with private channels as this is best for privacy.
If you’re the casual user I would recommend opening a channel to only one or two well connected, high capacity and low fee nodes as this should be enough to get your payment routed to the vast majority of merchants on the network. You can also connect directly to the node(s) you intend to interact most with whether this be a public merchant or your friends node. To find good public nodes you’ll want to look through 1ML.com, there you can search by top channel count, network reach and capacity. While not completely necessary you’ll preserve more of your privacy by also connecting to a node through their onion address. Here is a search of public nodes by top network reach with an onion address: https://1ml.com/node?order=nodeconnectednodecount&iponionservice=true
While you could just connect to any well connected node and be done with it an important point to remember is each node can set their own fee per channel and some will be much higher than others. While the fees are generally very small when compared to bitcoin main chain transactions they can add up over time so you’ll want to choose a well connected node with the lowest possible fees. A quick way to see this is via the 1ML statistics tab on each node page which will show a median fee rate and median base fee to quickly compare between nodes.
Though this is just an average so a more accurate way to see fee rates is via the channels tab sorted by top capacity on each node page. There you’ll be able to see the actual fee rates for the channels you’ll most likely be routing through, this is also a good way to see whether the node has direct connections to the merchants or services you’ll be using most.
Another good resource to find reliable and well connected nodes is through the BOS score rankings: https://lightningwiki.net/bos/. Keep in mind though some high profile public nodes are not included in these rankings.
Connecting to a node and channel liquidity
Once you’ve found at least one good node to connect to decide on how much bitcoin you’d like to allocate to the channel, this will depend on what you intend to buy and how often. Ensure it’s a reasonable amount of at least a few 100,000 sats otherwise you’ll be replenishing the channel too often which requires on chain transactions. I should mention here that you can’t add to or change the amount in your channel once opened. To change its capacity you’ll need to close and then reopen the channel with your desired new capacity which requires two bitcoin main chain transactions.
Opening a channel is quite easy you just need the nodes public key and either its IP or onion address followed by port number, all of this can be found on the overview tab of the 1ML node page.
For example here is getumbrel.com’s full lightning address: firstname.lastname@example.org:9735
You can open a channel to any node from your Umbrel dashboard through the lightning tab on the side menu, although this appears to only be able to open public channels at this time. To open a private channel to a peer you’re not connected to you’ll need to open up ThunderHub and click on the Channels side menu option, from there click on the gear icon in the top right and select manual at the bottom.
The above screen is what you’ll then see. Unless your node is already connected as a peer to the node you wish to connect to which is unlikely you’ll need to select “Yes” for “Is New Peer” and then paste the nodes full lightning address which includes the public key@onion address:port into the New Node box. Then add how many sats you want to allocate to the channel and select the node type as private. Clicking open channel will then initiate an on chain transaction and begin the opening process. Opening and closing channel transactions require 3 on chain confirmations before being finalized.
To send payments you’ll need the receiver to generate a lightning invoice for the payment (happens automatically on merchant checkouts), then copy and paste this into your lightning wallet to send. You can do this through the Umbrel dashboard or you can also hook up your node to a number of desktop and mobile wallets so you can scan QR invoices as well, we’ll go over this setup later.
Once you’ve spent the total amount in your channel you won’t be able to spend anymore without replenishing the channel. There’s a few ways you can do this, 1) you can close this channel and then open another which requires two on chain transactions, 2) you or someone else can make a payment to your lightning node from another wallet which technically requires one on chain transaction to get into lightning or 3) you can use a Loop In service which also requires one on chain transaction. The Loop In service can be accessed from the Ride The Lightning or Lightning Terminal apps, there are fees associated with this service and a minimum of 250k sats channel capacity is needed to use it. The Loop In service is handy when you have a number of channels you need liquidity replenished for.
If you only have one or two channels though what I personally do is manually “loop in” through another wallet I control. I do this by sending on chain bitcoin to a separate wallet (I use Muun on mobile which is stupidly easy to use and seamless between bitcoin and lightning) then I send that bitcoin through lightning back to my Umbrel node, simple and cheap.
To receive payments through lightning requires “inbound liquidity”. The easiest way to get this is to just send a payment through lighting using the channel you’ve setup. You can send a payment to a merchant to buy something or you just send some sats to another wallet you control. The amount you sent as payment will now be available to be sent to you from others as inbound liquidity.
There is also a “Loop Out” service available in the Ride The Lightning and Lightning Terminal apps that can do this for you and then send bitcoin on chain back to your main wallet although there are extra fees involved and again it’s mostly suited to people or merchants with numerous channels. Another way to get inbound is to get another well connected node to open a channel to you, there are services for this as well and Lightning Terminal has a marketplace that facilitates this which I’ll discuss briefly later.
Receiving a payment requires you to first generate an invoice which is rather easy to do you just need to choose an amount you want to receive and can also provide an optional description for the invoice, this can be done from the Umbrel dashboard or the lightning apps. If your channel is private though you’ll need to also add “private routing hints” to your invoice or the payment won’t be able to be routed to you. This is not currently possible through the Umbrel dashboard but can easily be done through the Ride The Lightning app by clicking the routing hints slider when creating the invoice.
Using your node on mobile and other wallets
Probably one of the best features of Umbrel is how easy it is to connect your node to other mobile and desktop wallets so you can use lightning and bitcoin wherever you are while retaining full control. The connect wallet tab in the Umbrel dashboard has simple setup guides for several wallet providers including Electrum, Phoenix, Zap and Zeus. You can also connect manually to pretty much any other wallet via the lndconnect url’s provided.
Some wallets do have issues connecting over Tor so it’s not always seamless however I haven’t had a problem connecting my Umbrel node with Zap or Zeus on Android. Zap on Android is lacking in features at this moment so I’d recommend Zeus as it has pretty much everything you’d need. You can send and receive lightning and bitcoin as well as manage your channels in app. If you need to manage more than that while you’re away from your node you can always access your Umbrel dashboard from its onion address using a Tor browser.
Where to use lightning
More and more merchants are getting involved in the lightning network and this will only continue once they realize how quick and easy it is to accept payments for next to no fees and with finality unlike credit or debit cards. There’s now quite a few major services that allow you to buy almost anything you want on the internet using lightning, below are just a few:
Moon just released their browser plugin a few days ago but the concept is great. It allows you to create virtual Visa debit cards for one off online purchases and fund this card through lightning. Although at the moment the virtual Visa cards are only accepted at online retailers in the USA.
With Bitrefill you can purchase gift cards for a number of retailers across the globe effortlessly with lightning. They also have rewards giving you sats back for most of the gift cards.
Fold is primarily a mobile app but has a web app section as well, it’s similar to Bitrefill in that you can buy gift cards for a number of major retailers although the majority of them are only in the USA. They do also have sat back rewards for each purchase, discounts for using lightning and are currently bringing out a Visa bitcoin rewards card.
Spendl is a similar Visa virtual card service to Moon however can be used at online merchants around the world who accept Visa. They do require you to submit full KYC before making use of the service though.
LROS is an Australian service that allows you to pay your bills using lightning and get rewards back for doing so, they do require full KYC before making use of the service. There are also similar bill paying services in other countries.
More lightning apps and services can be found here:
Routing nodes route payments for other people through the network in exchange for a small fee although you could set it to route payments for free. I’d recommend doing this only if you have a reasonable amount of capital able to be deployed >0.5Btc, good internet >100Mbits and a stable power supply with a UPS for backup. If you’re serious about it you may also want to run the node on more substantial hardware compared to a Pi 4 and be comfortable using the lncli or similar, though ThunderHub and Ride The Lightning do offer the majority of what you’ll need as a routing node operator with a nice GUI. In saying all this though as the lightning network continues to grow over the coming years and more merchants come online there will likely be a business in being a routing node and getting started early is always an advantage.
Other lightning apps
Umbrel also currently includes two other lightning node management apps in their store, Lightning Terminal and LNbits. While not necessary for the average user they are both worth installing and playing around with to explore the functionality of lightning as they have some cool features.
For instance LNbits allows you to create multiple lightning wallets using your Umbrel node in order to segregate payments and balances as you need such as among family and friends or projects. They also offer a few other neat tools such as a sharable point of sales terminal for lightning, the ability to create paywalls for content and automate the selling of subdomains and event tickets. You can also create pay links to sell goods and services that update automatically so you don’t have to generate an invoice for each order. Another included ability is generating withdrawal links or vouchers opening up the possibility for automated giveaways, subscription services and withdrawals from your apps.
Though not intended for the beginner that’s not a routing node or merchant the Lightning Terminal app has an interesting new concept called the Lightning Pool. Here you can place a bid to get inbound liquidity to your node for a period of time (currently 2 weeks) in exchange for a premium. You can also offer outbound liquidity to other nodes in the marketplace and earn a premium yourself.
Words of caution
As a final word keep in mind that the lightning network is still experimental software more so than bitcoin itself is and while development continues to help iron out known vulnerabilities there may be other unknowns that we’re yet to come across. As always err on the side of caution just like with anything but don’t let that stop you from experiencing lightning speed bitcoin.
Learn more about lightning
To learn more about the technical details of the lightning network and how it all works behind the scenes here is some good reading:
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