Electrum Lightning Wallet – Lightning Wallet with the Electrum Wallet

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Electrum Lightning Wallet – Lightning Wallet with the Electrum Wallet

Electrum Lightning Wallet is a Lightning Wallet based on the well-known Electrum Wallet. Since version 4.0.1 the Electrum Wallet also supports Lightning.

Install the Electrum Wallet on your desktop computer (Windows, iOS, Linux) and set up a new Bitcoin Wallet. Then set up a new wallet using the Install Wizard. You give your new wallet a new name and start the setup as Standard Wallet. Then a new seed should be created. You have the choice between segwit and legacy and you choose segwit.

This new wallet must support SegWit addresses in bech32 format. These are the Bitcoin addresses that begin with bc1

After the wallet is set up, go to Wallet and then Information in the menu.

Electrum Lightning Wallet

In the Information section there are Wallet Settings and Lightning must be activated here.

Electrum Lightning Wallet enable Lightning

A warning appears, which we confirm.

Enable Lightning payments?

The first step is to load on-chain credit onto our wallet. For this we use the Receive function and load at least the equivalent of 200,000sats in the form of Bitcoin onto the wallet.

recharge electrum Lightning Wallet via On-Chain

Under History we see these transactions and have to wait until this transaction has been confirmed by the block chain. This can take up to an hour.

Unconfirmed on-chain transaction

Once the Bitcoin on-chain transaction is confirmed, we are able to open a channel to another peer.

We go to the menu item Channels and there we have the function Open Channel.

Electrum Lightning Wallet Open Channel

When we clicked on Open Channel, we see our own Node ID (Your Node ID).

Our own Node ID can be safely communicated to other peers so that they can open a channel to us.

In the Remote Node ID field we enter the Node ID of the peer to which we want to establish a connection.

We want to establish a connection to the node of Coincharge and enter the corresponding Coincharge address:

0318ac9faa9629e7da08819bc8fe0dd2ae3044d69b1b2283a63479acffeb968483@172.81.178.22:9735

Then we are asked to what extent the channel should be filled with liquidity.

The minimum amount is 200,000 sats. In the first attempt (see screenshot) we had tried it with a too small amount.

Electrum Lightning Wallet Node ID and Remote Node ID

Then only the mining fee is deducted and we enter our Electrum Password, which we set up when we set up the Electrum Wallet.

Electrum Lightning Wallet Node ID and Remote Node ID

We receive the message that the opening of the channel has started and will be available after 3 confirmations.

Electrum Lightning Wallet Channel established

In the History section the channel opening is displayed.

Electrum Lightning Wallet Channel opening

To connect your own node well within the lighting network, it is necessary to connect to numerous peers via appropriate channels.

It is also important that the channels have adequate liquidity. This liquidity is required on the local side if you want to send Lightning payments. If you want to receive Lightning payments yourself, remote liquidity is required.

How to obtain the appropriate liquidity is described in the article https://coincharge.io/lightning-liquiditaet/.

After 3 Confirmation our Electrum Peer with our Node ID: 0260cab………eab9716 is listed at Coincharge

Electrum Lightning Wallet channel connect

The channel is stopped and for Coincharge the credit is displayed as remote credit.

Coincharge opens a channel for the same amount in the opposite direction.

Electrum Lightning Wallet channel connect

Within the Electrum Wallet it is possible to receive remote credit via swap.

Electrum Swap

With the swap method you send Lightning credit to the swap service provider and get Bitcoin back. The idea behind this is that when you send Lightning you build up a remote credit. You can increase this remote credit by paying yourself via Lightning or sending it to another peer. In this case you send Lightning, increase your remote credit and get it back in the form of Bitcoin (On-Chain), because you don’t spend your Lightning.

This will change Lightning credits to Bitcoin credits and give you Remote Balance. The remote balance is required to receive Lightning payments.

Electrum Lightning Wallet Swap

The fee is 0.5 percent of the exchanged volume plus the transaction fee. But you can also use other services and swap providers to increase your liquidity or remote balance. See the article Lightning Liquidity

Watchtower

If you have opened channels to other peers, these channels must be permanently checked for changes on the channels. When a channel partner closes the channel, the channel is blocked for 1,000 blocks. This corresponds approximately to the duration of one week. If this channel partner closes the channel with an incorrect amount and is not contradicted within this week, you can lose money.
Therefore you should go online with your Electrum Lightning Wallet at least once a week to keep the channels up-to-date.

We can see in the lower right corner of the display how a synchronization with the Lightning network is done.

Synchronization of the Lightning Network graph

If you do not manage to monitor your channels at regular intervals, you can have a watchtower take over this task.

This monitoring is carried out by so-called watchtowers. It is important that these channels are monitored, because his channel partner could secretly close a channel and report an outdated channel status.

This can be prevented by watchtowers, which can watch the channel and punish the partner for trying to cheat. You can run such a watchtower locally, but this means that you have to keep your computer running permanently. This Watchtower monitoring can also be done by another server for you. It can be assumed that corresponding service providers will provide this service in the near future.

In our case it is unproblematic, because we are connected to another peer of ours and therefore a closure of the channel with a wrong channel amount can be excluded.

To activate a local Watchtower service, we go to Tools and then Electrum Preferences. There is the function Lightning and there we can activate the Watchtower Services.

Electrum Lightning Wallet Watchtower

Conclusion

With Electrum, the most popular Bitcoin Wallet for the computer also supports Lightning. The handling is so simple and uncomplicated that you rub your eyes in amazement.

Is there really everything available for Lightning here for which you would otherwise have to operate your own Lightning Node?

With the Electrum Lightning Wallet you can send and receive Lightning payments and use all functions required for Lightning without restrictions.

The graphics and user interface is typical Electrum style and takes some getting used to for newcomers, but is 100% functional.

Those who have already familiarized themselves with Lightning will quickly find their way around with the Electrum Lightning Wallet.

The typical Lightning problem is the connection within the Lightning network and the setup to other peers with corresponding channels. But if you are well networked and have sufficient remote and local balance, you have a perfect Lightning Wallet that leaves nothing to be desired.

Some points are also still unclear to me and I would be pleased if readers could perhaps help me to answer them.

  • Since a Lightning Electrum Wallet usually runs on your home computer, which is not always online, are there any disadvantages if my Lightning Wallet is not always online?
  • Do I have to go online with the Lightning Wallet regularly so that the channels can be updated? Is there a time recommendation, such as at least every 5 days?
  • Should I use a Watchtower service and which service can I recommend?
  • Is the Electrum Lightning Wallet really like an own Lightning Node?

Be glad about comments in the comment field below or by Telegram or Twitter.

This post is also available in: German

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