In part one of this series, the focus will be getting the newbie user from 0-1 using the Lightning Network and actually being productive with it. “Productive” in this context will be saving money. This is a use case that appeals to most people and it is a use case that resonates with me.
An example of this would be using using a LN powered service called “Pay with Moon” which recently had a 5% discount during Amazon’s Prime day.
Stick around to the end of this article to read some of the best ways to do this.
How do I get Bitcoin?
Throughout this onboarding series, I’m going to be suggesting people use the Cash App by Square to buy their Bitcoin. If you haven’t already signed up, you can sign up using this link. Disclaimer: this link is a referral link that will pay both you and myself $5 for signing up.
To get started using the Cash App to buy Bitcoin, you will have to go through their KYC process. This will include taking a photo of your ID and taking a selfie for them to verify your ID with. Cash App is limited to the United States as well. Some alternatives: Bittr if you live in Europe and Amber if you live in Australia. To note: I have never used either of these services and cannot vouch for them.
Loading up Bitcoin into Lightning Wallet
We will assume you were able to get some Bitcoin in the Cash App or otherwise. Great, now that you have some Bitcoin, lets proceed!
The custodial wallet that I like the best and I would most recommend is Wallet of Satoshi. Please download this wallet either for Android or for iOS to get started. Keep in mind, you should not load this app with more Bitcoin than you can stand to lose. This is a custodial wallet, meaning that someone else is controlling your Bitcoin and could runaway at anytime.
Once downloaded, go to “Top up” in the upper left hand corner:
Click the Bitcoin icon on the right hand side:
Send the amount of Bitcoin that you’d like to load up your Lightning wallet with. I’d recommend around 150,000 satoshis (around $15 at the time of writing) to get started so you have enough to spend and test things out. If you’re sending from the Cash App, they pay a high fee so you should have money in your wallet within 30 minutes or so. Keep in mind that Wallet of Satoshi will charge a 0.3% fee on whatever amount of on-chain Bitcoin you send to it.
How can I make use of the Lightning Network?
Now that you have Bitcoin loaded into your Lightning Wallet, you might be wondering how you can make use of it within this magical layer two.
Before we get to the more practical things, I’d suggest you go over to Yalls.org and test out some microtransactions. Each article is only 150 satoshis and should show the speed of the transaction and how it can be used for microtransactions.
Next, I thought it might actually be a good idea to be able to use this practically, that’s where Lightning Pizza comes into play: https://ln.pizza/, this is a website that allows you to order Domino’s Pizza using the Lightning Network with a 5% discount off of your purchase.
Putting this into perspective, Cash App will charge you roughly 1% fee to buy Bitcoin. Wallet of Satoshi will charge you 0.3% to move your Bitcoin onto the Lighting Network. This will bring your discount down to 3.7%. This should be a proof of concept that the Lightning Network using Bitcoin could be a way to save money without needing to HODL Bitcoin.
There are some other ways to use LN in a practical way at the moment, though there isn’t much of a discount in using them:
Pay with Moon — Allows you to make purchases on Amazon.com with the Lighting Network without needing to buy the gift card seperately.
Fold App — Allows you to buy gift cards for various vendors including Amazon, AMC, Dunkin Donuts, Home Depot, Macy’s REI, Starbucks, Southwest, Target, Uber, and Whole Foods! They allow you to use Bitcoin on-chain or with Lightning.
Bitrefill — Bitrefill allows you to buy many different kinds of gift cards to various vendors as well as Phone refills and Lightning Network services. They accept Bitcoin, various altcoins, as well as Lightning with a 2% discount on certain products.
Here is a comparison of total cost in satoshis that I presented on my Twitter account:
To get more people using LN, it will become important for these above services to offer discounts. These discounts would help to build the productive use of LNfor Bitcoiners and non-Bitcoiners alike.
Thanks for reading this article on how to use the Lightning Network using a custodial wallet and how you might get some use out of it! Do you have any ideas how to improve this article? If so, don’t be afraid to let me know in the comments below or on my Twitter account!
Here is the rest of the articles in this series:
Part II: Non-Custodial Wallets
Part III: Graduating to better wallets.