Harnessing Lightning For Instant Bitcoin Transacting — A Tutorial
A quick text + video tutorial
Update: I received some much appreciated feedback from the community to highlight this important message more prominently in the post:
Before you begin, be mindful that this software is experimental and could contain bugs that result in lost funds. Only use small amounts of bitcoin that you can afford to lose.
Bitcoin is a decentralized peer-to-peer payment network used all around the planet to transact trustlessly. The system enables trustless transactions by requiring miners to include transactions in blocks, which are linked to each other cryptographically. However, this means that transaction confirmations take time, and not everyone has the luxury of time. The answer to this inconvenience is payment channels, which Satoshi Nakamoto described as a way to enable “high-frequency transactions” between channel partners, as opposed to waiting roughly 10 minutes for a confirmation. Lightning takes this idea and deploys it on a large scale. Instead of only being able to pay your channel partner, you can instantly pay anyone on the Lightning Network, which is a network of payment channels.
Recently, Blockstream released an e-commerce shopping page called Blockstream Store, which uses their newly released Wordpress e-commerce plugin built using Lightning Charge. The most exciting part is that you can only purchase things on the Blockstream Store with a Lightning Network payment on Bitcoin’s mainnet. This is a tutorial on how to setup your own Lightning node to purchase items or to receive Lightning payments using
c-lightning, Blockstream’s Lightning implementation.
- Linux (Ubuntu 17.10 is used for this guide)
- Ample storage for Bitcoin’s blockchain
- Basic to intermediate command line knowledge
- A fully synced Bitcoin node with SegWit
- Some bitcoin
Step 0: Installing build tools and dependencies
Our first step is to install, via
apt, the tools needed:
sudo apt-get install -y autoconf automake build-essential git libtool libgmp-dev libsqlite3-dev python python3 net-tools tmux
Step 1: Installing bitcoind from the Bitcoin PPA
bitcoind from source, download and verify the binary from bitcoin.org (preferred method), or install from the Bitcoin PPA:
sudo apt-get install software-properties-common
sudo add-apt-repository ppa:bitcoin/bitcoin
sudo apt-get update
sudo apt-get install -y bitcoind
Step 2: Cloning the lightningd repository and building:
Now grab the
c-lightning code and then build it:
mkdir builds && cd builds
git clone https://github.com/ElementsProject/lightning.git
make -jn to speed up compilation.
n being the number of threads dedicated to building. Example:
make -j10 for a processor with 10 or more threads (like a Xeon).
Step 3: Running bitcoind, lightningd, and lightning-cli to confirm correct installation
bitcoind , then
lightningd , then
lightning-cli to confirm everything is installed correctly:
Make this process cleaner by using
tmux to keep everything neat and tidy in one terminal:
bitcoind , and watch its startup from the log, then test it with
tail -f ~/.bitcoin/debug.log
lightningd and test it with
./lightningd/lightningd --network bitcoin --log-level debug
Step 4: Connecting to a remote lightning peer
lightning-cli successfully build, connect to a peer and sync the channel graph. The peer used is Blockstream’s:
./cli/lightning-cli connect 02f6725f9c1c40333b67faea92fd211c183050f28df32cac3f9d69685fe9665432 18.104.22.168 9735
The graph syncs automatically (
lightningd log output) :
Step 5: Creating an address to fund in order to open a channel:
Opening a Lightning payment channel requires a funded UTXO. Generate a Bitcoin address with
lightning-cli to send some bitcoin to.
Send some bitcoin to that address, but be mindful that this is experimental software.
Step 6: Confirming we have received the BTC
lightning-cli to check if the address is funded:
Step 7: Opening a channel with the peer we connected to earlier
To open a payment channel, find the node’s pubkey or id (in this case, Blockstream’s) and then use
lightning-cli to initiate opening the channel:
To print the peer’s node id:
Copy that id and fund the channel with some number of satoshis:
./cli/lightning-cli fundchannel 02f6725f9c1c40333b67faea92fd211c183050f28df32cac3f9d69685fe9665432 amount_in_satoshis
Step 8: Monitoring lightningd logs for funding transaction confirmations:
Optionally, switch back to the
lightningd window with
tmux to watch for your funding transaction to be confirmed:
Step 9: Confirming we have opened a channel:
Three confirmations are required for opening a channel. Once the funding transaction has three confirms, use
lightning-cli to list our new payment channel.
./cli/lightning-cli listchannels | grep your_nodes_pubkey
Congrats! You’ve opened up your first Lightning Network payment channel!
You can now invoice others to receive instant payments, or you can pay an invoice that someone has sent you!
./cli/lightning-cli invoice amount_in_millisatoshis label description
./cli/lightning-cli pay bolt11_string
Thanks for reading!