What are the main obtacles you encountered?
Discussion
Well, like I said, I am in the process of trying to understand the lightning network. I started with phoenix wallet that was pretty easy set up. We know what happened with phoenix in the US.
Now I have downloaded Mutiny Wallet and ZEUS . So now I’m understanding that these wallets all have different features . I’m also learning that having a wallet doesn’t mean you have a lightning address . This is where the confusion starts.
The next confusing thing is funding layer 2 from layer 1. I thought with the wallets having on chain and layer 2, I would be able to send the on chained to layer 2, but that is not how it work. I understand that I need a second channel. But that in itself is confusing as well because if I’m trying to send on chain Bitcoin to the lightning network, I don’t understand what the second channel role is.
From the tutorials I’ve been watching everybody funds their lightning wallet from another lightning wallet, so the question is how do you fund the initial lightning wallet? I was able to fund my wallet because I had already been able to set up a Phoenix wallet .
Now I’m confused on how to add funds to layer 2. In addition, it seems that I’m only being allowed to add so much funding to my lightning wallets. Which means there is a limit on what I’m able to purchase using lightning simply because I can only fund my account up to a certain amount which I don’t even understand what that is.
I understand there is inbound liquidity and outbound liquidity, but I do not understand how you adjust those liquidities and how those liquidities affect my transactions. So on one hand, I understand the necessity and need for lightning network, on the other hand the lightning network is not easy to navigate.
I know it’s KYC but maybe start with Strike and fund the lightning there and then transfer to Mutiney/Zeus.
Oof... I get the delemna. I agree, there's some work to do. Lots to unpack there. First, I will say, that strike is a great option. They do a great job of abstracting most of the Bitcoin confusion away from the user and just let them use the payment rails seamlessly. It's beautiful. It's the app that I use to onboard people to Bitcoin.
But, the ethos of Bitcoin is self-custody and strike is custodial. You can't get into self-custody until you take the time to understand how Bitcoin works. Many of the apps that are built can't abstract that piece because users need the ability to connect to their set-ups (nodes).
As far as L1/ L2... "Lightning" is basically a smart contract between two parties. It creates a relationship on L1 for a fixed amount. This is why with most wallets, you first fund the wallet, then you open a channel. Once the channel is opened, you'll have outbound liquidity. It's like opening a tab at the bar. You can make payments to the bar, but you can't really receive payments that way.
You don't really "fund L2" as much as you are opening a payment channel using L1. I guess people say "funded" because the funds are now locked into a payment channel. That network of payment channels is the lightning network.
There's no getting around the fact that once you get into self-custody, the waters get very deep, very fast. Personally, I do believe that custodial services will be a must in this space as much as it pains me. The average user is just not going to go through all of this.
Thanks for helping clarify. So if you don’t really fund L2 , does that mean you have to continuously open additional payment channels to add more funds to L2?
Basically, yes. Or close and reopen a larger channel.
You can't send or receive an amount larger than a channels capacity but I'll be honest, I'm not sure what the behavior would be if you had a large number of small channels and tried to send a large amount. Could work 🤷♂️
Personally, I prefer to have at least 2 well funded channels with well connected nodes.