Lightning Network Workshop
A hands-on workshop — download a wallet, send and receive sats P2P.
Workshop Goals
What We're Doing Today
- ⚡Download a self-custody Lightning wallet and send/receive sats peer-to-peer
- ⚡Understand the trade-offs for each Lightning wallet option
- ⚡Learn how Lightning works on a basic level (nodes, channels, invoices)
- ⚡Explore liquidity: inbound vs. outbound capacity
- ⚡Understand privacy pros and cons of Lightning
Scalability
Why Lightning?
The Problem
- ✕ Bitcoin processes ~7 transactions per second on-chain
- ✕ High fees during congestion make micropayments impractical
- ✕ 10-minute block times slow confirmation
The Lightning Solution
- ✓ Off-chain payment channels settled nearly instantly
- ✓ Fees measured in fractions of a cent
- ✓ Millions of transactions per second — theoretically unlimited
Important
Disclaimers
On-chain is often fine right now.
On-chain fees are currently cheap. Lightning's main practical advantage is for merchants — Square terminals and similar POS systems only accept Lightning.
Lightning is NOT for your savings.
A Lightning wallet is always "hot" — keys are always online. Don't keep more sats in a Lightning channel than you'd carry as cash in your physical wallet.
Privacy depends on your node.
If you're not using your own node, assume the node you're connected to can see all your payments.
Wallets
Lightning Wallet Options
Try one or two of these. Beginners: start on the easy side and graduate toward Phoenix or Breez. Node runners: Zeus is ideal.
Easiest onboarding. Wallet of Satoshi uses Spark; Muun is an on-chain wallet that does Lightning swaps in the background.
Trade-offs: WOS: Spark protocol + privacy concerns. Muun: high fees when on-chain fees are elevated.
Best for: Complete beginners
Self-custody with automated channel management — the best of both worlds for most users.
Trade-offs: Higher fees than custodial wallets; some privacy tradeoffs.
Best for: Most Bitcoiners
Full control. Connect to your own node or use Zeus's embedded node for maximum sovereignty and channel management.
Trade-offs: Significant complexity; requires understanding of liquidity management.
Best for: Node runners
How It Works
Channels, Nodes & Invoices
Channels
A two-party payment channel funded on-chain. Funds move back and forth off-chain, and can process as many payments as you want as long as the channel stays open. Your channels connect you to the rest of the network through your peers' channels.
Nodes
Each participant runs a node. Nodes route payments through connected channels. If you're not using your own node, you're using someone else's. Nodes must stay online for connectivity.
Invoices
Payment requests encoded as a string of text. They specify amount, destination, and expiry — scan or copy-paste to pay.
Technical
Inbound & Outbound Liquidity
Understanding how funds move within Lightning channels is crucial for efficient payments.
Inbound Liquidity
Capacity to receive payments. Others have funds on your side of the channel, enabling them to send to you. Without it, incoming payments can't route.
Outbound Liquidity
Capacity to send payments. You have funds on your side of the channel — this is your spendable balance.
Quick inbound liquidity hack
- Open a larger channel than you need (e.g. 1M sats)
- Create an invoice on Muun for 500K sats and send to yourself
- Send from Muun back to your on-chain wallet — now you have 500K inbound
Self-Sovereignty
Running a Lightning Node
Setting up your own node gives you full sovereignty over your Lightning payments.
Software
LND, CLN (Core Lightning), Eclair
Plug-and-play
Umbrel and Start9 for beginners
Build your own
RaspiBlitz and MyNode
Opening channels
Fund with on-chain BTC and connect to peers
Privacy
Lightning Privacy
Sending privacy — good, if you run your own node
The recipient cannot see the UTXO that funded your channel. Nodes along the route can only see the node that sent them the payment and the next node in line — one hop forward and one hop back.
Receiving privacy — not good
The sender can see the entire payment path and knows the destination. Most people use Lightning Service Providers (LSPs) which degrade privacy further since the LSP sees all your payments.
Maximize Privacy
- • Run a Tor node
- • Use unannounced channels
- • Wrap your invoices
- • Open channels only to trusted peers with good liquidity
Maximize UX / Be a Routing Node
- • Run a clearnet node
- • Announce channels publicly
- • Open channels to large hubs (ACINQ, Olympus, Kraken, WoS)
Hands-On
Making & Receiving Payments
Generate an Invoice
The receiver creates an invoice with the requested amount.
Peer Scans or Pastes
The sender scans the invoice QR or copies the text, confirms the amount, and sends.
Node Routes Payment
The connected node uses its channels with other nodes on the network to route the payment to the recipient through the cheapest path.
Settlement
Payment confirmed and settled in seconds. No block confirmation needed.
Today
Real-World Use Cases
Micropayments & Content
Tip podcasters via Podcasting 2.0, or stream sats per minute with apps like Fountain.
Merchant Payments
Brick-and-mortar and e-commerce stores accept Lightning globally with BTCPay Server or Square. Steak 'n Shake accepts Lightning payments.
RoboSats P2P Trading
RoboSats requires Lightning payments to lock up escrow in peer-to-peer trades.