To use the Bitcoin lightning network you do not need a Bitcoin/Lightning node. So yes you can use the Lightning network without having your own node. However to really use the network to the fullest you could run your own node and enjoy the benefits.
In this article we take a look at how you can use the lightning network with or without running your own node and the benefits for both of them.
What is a lightning network node?
The lightning network is not a blockchain by itself and does not store its transaction data on its own digital ledger. Instead the lightning network sits on top of the Bitcoin blockchain. Which functions as its base layer. This means that to run a lightning node you must first run a Bitcoin node. Making it so that a Bitcoin node always holds the Bitcoin blockchain as well.
When you are using your own Bitcoin Lightning node, you can only send transactions over lightning when you have some channels open to some other nodes. Opening channels to another node operator lets you send some BTC back and forth before settling the final transaction on the main Bitcoin blockchain.
Although setting up your own node comes with many benefits, if your technical skills are not that high, it might be easier to use other services. Like the Zebedee wallet that lets you use the lightning network with them as the custodian.
Benefits of using your own Lightning node
Running your own lightning node comes with many benefits. So if you can afford to run one and have the technical knowhow to do so. I would highly recommend it.
By using software like the Umbrel anyone can set up a node super easily. With its smooth layout you can create your own personal server that functions as a Bitcoin lighting node at the same time.
Benefits of running your own lightning node are:
- More privacy when transacting over the BTC lightning network
- Helping secure the Bitcoin blockchain
- Having your own private server that can be used for all sorts of features like self storage and hosting
- Being able to close your channels and move your BTC to the mainchain yourself
Besides these benefits it is also very fun to set up your own node, making connections to other nodes and being part of the network as a whole. So if you have the equipment needed to spin up your own. I would highly recommend you try. But if you are thinking of becoming one of the larger payment routing nodes on the network. You might want to acquire some large amount of Satoshi’s before you can compete with the big boys on the network. Because setting up your own Bitcoin node and becoming a large profitable payment router on the lightning network are 2 totally different things.
The cost of starting your own lightning node
Although setting up your own lightning network node does not have to be that difficult. It does not always come for free. To set up a lightning network node you will need the following equipment. Or use an old laptop/computer that you can dedicate solely for this. Although the cost can differ depending on the set up you use. Your setup should not exceed a 1000$. And could come at a cost of 100$ if you buy the cheaper equipment.
But besides the necessary hardware you will also need something of even higher value. I'm talking of course about some BTC, some satoshi’s, some Sats. Because without any Bitcoin on your device you won't be able to open channels to anyone else or even transact over the lightning network.
Like you might already know. To transact from one lightning node to another you will need to open a channel. You can do this by locking your Bitcoin in a channel on your side, the other side, or both sides. The maximum amount of Satoshi’s that you will be able to send from your node to the other node will depend on the amount of Satoshi’s that you have locked in the channel. So if you have locked 500,000 Sats on your side but the other side has locked in 0 Sats. You will be able to send or route a maximum amount of 500,000 Sats to the other side. From the start the other node won't be able to send you anything because they have not locked in any Sats. However if you would send 250,000 Sats to the other node, this would bring the balance of 250,000 over to them and as long as the channel stays open they would be able to send you that same amount back.
The cost of channels
To really get your node started you will have to open some channels to other nodes. But like mentioned before, this will come with the cost of having to lock in some BTC. The more channels you open and the more Sats that are locked in both sides of the channel, will make it more likely that your node will route payments and will also make it easier for you to have a wide range of channels that can send and receive both all around the network. Good to note is that the BTC that you would lock in channels will be returned to you on chain when you close a channel.
If you only operate a node for fun and you don't really care about routing other peoples payments, then 1 or 2 channels with funds on both sides would be enough for you and will open you up to the rest of the network. But if you are more serious about becoming a routing node you might want to open large channels to other large nodes and find the best paths and nodes to connect to. So you will be the number one choice for any payment moving through the network.
This will however cost you a lot. As acquiring all that BTC to lock into channels does not come for free. But on the plus side of things it could make you a nice income stream from routing payments.
For those of us that don't want to become a routing node, we could simply have 1 or 2 small channels. But do keep in mind that you want the channel to not be smaller than the payments that you are likely to make. As if the channel is smaller than the payment, it won’t go through. So if you expect to only make payments of $1 all the time. A channel of $200 might be more than enough for you. But if you want to pay $100 multiple times a month you might want to consider a channel of $2000 or more.
The cost of your lightning node will thus depend on those two factors. Your equipment cost ($100-$1000 range), plus the cost of the locked BTC ($200-2000+$).
Lightning wallets that do not require you to run a Bitcoin node
For those of use that have no interest in running our own lightning node. Maybe because you find it too difficult or too expensive, there are also options that let us use the lightning network without having to operate our own node. These options are always either crypto exchanges that have lightning enabled or any of the Bitcoin lightning network custodial wallets.
Although these wallets go against some of the main principles of Bitcoin, like self custody and control. They do make it easier, cheaper, and more user friendly for beginners to start. With many wallets like Zebedee that not only function as a wallet but also as a hub for their Bitcoin games that let players win some Sats for playing video games. But there are also some that only focus on transactions on the layer 2 network or that over a large variety of blockchains and sidechains. Below a small list of Custodial lightning network wallets.
- Zebedee - A wallet focussed on gaming
- Blue wallet - A wallet focussed on transactions on and off chain
- Wallet of satoshi - A wallet specialized in fast lightning transactions
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