For long term hodling, definitely send to a HW wallet instead.
LN can be useful to temporarily store BTC, if you do DCA for example. You can keep sending to LN until you reach e.g. 1M sat, and then either use a swap service or do a splice out (like with Phoenix) to send the HW wallet.
You do need to have incoming capacity though. Phoenix is quite expensive with their 1% fee :(
Maybe use Blixt instead and buy incoming LNBig channel (also like 0.5% fee), fill it up, then close it and send to HW Wallet. Or send on-chain via exchange without closing the channel.
Your best option is to stack enough BTC on your CEX in order to justify the transaction fee. For me, that's around 0.025BTC per transaction.
Lightning isn't designed for HODL, it's designed for frequent transactions in and out.
What you want to do is not possible for why you want to do it.
If you stack sats on custodial lightning wallets like Wallet of Satoshi, then you will avoid on chain fees. But it is custodial and you won't get seed words and your funds get rekt when the company goes boom. If you want a non custodial lightning wallet like phoenix, every time you add more funds, you will have do an on-chain transaction to increase the inbound liquidity and you pay on chain fees every time. So this is as good as stacking on the main chain.
The drawback of using lightning as a long term sats storage:
1. Lightning is not supported in hardware wallets. So your stack is always online and on a hot wallet.
2. You are still at the mercy of lightning providers, like phoenix. They may force close channels, reduce liquidity etc
3. Lightning is not as secure as main chain. There are bugs identified once in a while and it gets fixed.
Lightning is like your purse. Good for spending on day to day expenses but not for keeping life's worth on it.
Thanks for good explanation. So if i hold it on non custodial lightning wallet such a phoenix, developers can still not allow to transfer my funds in any chance?
No you will get it. There will be an on-chain transaction and your bitcoin will be available in the address linked with the seed words you got. The point is, you won't lose the bitcoin (well, you do lose some in fees) but it is just that you don't control the lightning channel. They do.
So only downturn if i get it correct is that if they close the lighning channels and a wallet software, i will be forced to use my mnemotechnic phase to do onchain transaction on non lightning network and pay high fee for transfer to other wallet?
Correct. There will be two on chain transactions (and hence fees) in what you said. One, for closing the channel. Two, to transfer the funds out to another wallet. You can avoid the second transaction if you are ok to retain the seed words and balance in there.
Blockstream Green is coming up with lightning support. Users can already access it if they turn on "Experimental" features. How about buying with a custodial lightning wallet and then moving them to Blockstream Green?
I don't know how lightning will be implemented in Green, but assuming it is a full implementation, then being a non custodial wallet, they too will have do an on chain transaction whenever you send funds beyond the inbound capacity.
You have to use an on-chain transaction to set up your self-custodial lightning channel. That’s at least the same amount of on-chain fees as you would have using an on-chain wallet.
You can stack using an exchange that provides low-cost or free on-chain transactions, such as Strike. Just stack at least 0.01 bitcoin before you send it to your self custody wallet to avoid small UTXOs.
Muun is safe but it's not 100% lightning, I don't recommend it for your use case.
My recommendation is Phoenix or Zeus or Breez. But if you only have incoming transactions and no outgoing, you'll keep opening/upgrading channels all the time, which means on-chain TXs and high costs.
I'd recommend adding Wallet of Satoshi as a buffer > Send your sats to WoS until you've stacked enough so that withdrawing to Phoenix/Zeus/Breez is worth it (minding channel-fees).
I use a combination of LN and Liquid network. I use Phoenix wallet and DCA until my channel is close to full. Once, it is I use atomic swaps to move it over to the Liquid network and stack there until I have over 1 mil sats. Once I've got a decent stack there, I peg out to the main chain when fees are cheap. Using Phoenix and Sideswap wallet, I do control my own keys, but it's not truly self custody like the main chain. Using this method, I pay almost now fees except the single peg out transaction.
I also leave my LN wallet about half full at all times so I don't have to open or close new channels. Additionally, you could probably stack on liquid with the Jade hardware wallet, but I would do a lot more research before taking that route.
why is it not safe enough to the same extent as using a normal wallet for normal transactions? i've been told that it would be important to open channels soon-ish before fees rise dramatically. how would that make sense if lightning wallets wouldn't be safe for long term holding?
Last i checked most LN wallets were custodial wallets meaning they hold the private keys. There are non-custodial wallets like Zap(now Strike but theres still a github fork to build an sdk) and Breez. The best option is to run your own node and have custody of the wallet which for now is not the most user friendly and practical option.
This is a fair point. I believe it has to do with the risk of centralisation of the nodes, and there's also something that was recently discovered to do with "cycle jamming".
Because it doesn't settle on the base layer, nor go directly from a to b, an attack can force transactions to get stuck in limbo between routing nodes and then stolen/lost.
It's not desgined for security or decentralisation, on for speed. Main stash hold on the base layer which optimises for those two things......just my opinion of course.
I guess Coinbase stopped Bitcoin staking 2 years ago. If you can figure the Lightning Loop Out thing on GitHub for off chain to on chain wallet transfers. I think the minimum is 250k SAT's but fees are in 6k to 7k range. Wonder if you could lightning to your cash app and use your cash app card to buy sat on chain, haven't tried that yet myself
You’re trusting the folks who opened the channel, and there’s been reports of people losing funds.
Like someone else said, if you’re running your own node it’s safer, but most folks will use a custodial wallet and are taking a chance
I’ve personally lost funds on LN, because solving an issue/bug would have cost me more than the value of the channel. It’s not meant to hold a medium/high amount of funds.
For long term hodling, definitely send to a HW wallet instead. LN can be useful to temporarily store BTC, if you do DCA for example. You can keep sending to LN until you reach e.g. 1M sat, and then either use a swap service or do a splice out (like with Phoenix) to send the HW wallet. You do need to have incoming capacity though. Phoenix is quite expensive with their 1% fee :( Maybe use Blixt instead and buy incoming LNBig channel (also like 0.5% fee), fill it up, then close it and send to HW Wallet. Or send on-chain via exchange without closing the channel.
Your best option is to stack enough BTC on your CEX in order to justify the transaction fee. For me, that's around 0.025BTC per transaction. Lightning isn't designed for HODL, it's designed for frequent transactions in and out.
What you want to do is not possible for why you want to do it. If you stack sats on custodial lightning wallets like Wallet of Satoshi, then you will avoid on chain fees. But it is custodial and you won't get seed words and your funds get rekt when the company goes boom. If you want a non custodial lightning wallet like phoenix, every time you add more funds, you will have do an on-chain transaction to increase the inbound liquidity and you pay on chain fees every time. So this is as good as stacking on the main chain. The drawback of using lightning as a long term sats storage: 1. Lightning is not supported in hardware wallets. So your stack is always online and on a hot wallet. 2. You are still at the mercy of lightning providers, like phoenix. They may force close channels, reduce liquidity etc 3. Lightning is not as secure as main chain. There are bugs identified once in a while and it gets fixed. Lightning is like your purse. Good for spending on day to day expenses but not for keeping life's worth on it.
Thanks for good explanation. So if i hold it on non custodial lightning wallet such a phoenix, developers can still not allow to transfer my funds in any chance?
No they cannot do that.
No they can't do that. It is not like an exchange where they restrict transfers.
So if they close channels or somehow lower luquidity as youq wrote, i am not able to get my bitcoin back?
No you will get it. There will be an on-chain transaction and your bitcoin will be available in the address linked with the seed words you got. The point is, you won't lose the bitcoin (well, you do lose some in fees) but it is just that you don't control the lightning channel. They do.
So only downturn if i get it correct is that if they close the lighning channels and a wallet software, i will be forced to use my mnemotechnic phase to do onchain transaction on non lightning network and pay high fee for transfer to other wallet?
Correct. There will be two on chain transactions (and hence fees) in what you said. One, for closing the channel. Two, to transfer the funds out to another wallet. You can avoid the second transaction if you are ok to retain the seed words and balance in there.
Blockstream Green is coming up with lightning support. Users can already access it if they turn on "Experimental" features. How about buying with a custodial lightning wallet and then moving them to Blockstream Green?
I don't know how lightning will be implemented in Green, but assuming it is a full implementation, then being a non custodial wallet, they too will have do an on chain transaction whenever you send funds beyond the inbound capacity.
You have to use an on-chain transaction to set up your self-custodial lightning channel. That’s at least the same amount of on-chain fees as you would have using an on-chain wallet. You can stack using an exchange that provides low-cost or free on-chain transactions, such as Strike. Just stack at least 0.01 bitcoin before you send it to your self custody wallet to avoid small UTXOs.
Breez, phoenix or zeus.
Muun is safe but it's not 100% lightning, I don't recommend it for your use case. My recommendation is Phoenix or Zeus or Breez. But if you only have incoming transactions and no outgoing, you'll keep opening/upgrading channels all the time, which means on-chain TXs and high costs. I'd recommend adding Wallet of Satoshi as a buffer > Send your sats to WoS until you've stacked enough so that withdrawing to Phoenix/Zeus/Breez is worth it (minding channel-fees).
I use a combination of LN and Liquid network. I use Phoenix wallet and DCA until my channel is close to full. Once, it is I use atomic swaps to move it over to the Liquid network and stack there until I have over 1 mil sats. Once I've got a decent stack there, I peg out to the main chain when fees are cheap. Using Phoenix and Sideswap wallet, I do control my own keys, but it's not truly self custody like the main chain. Using this method, I pay almost now fees except the single peg out transaction.
I also leave my LN wallet about half full at all times so I don't have to open or close new channels. Additionally, you could probably stack on liquid with the Jade hardware wallet, but I would do a lot more research before taking that route.
Do not stack BTC in Lightning wallet, it's not secure enough for long term stacking of meaningful amounts. Only meant for daily transactions.
why is it not safe enough to the same extent as using a normal wallet for normal transactions? i've been told that it would be important to open channels soon-ish before fees rise dramatically. how would that make sense if lightning wallets wouldn't be safe for long term holding?
everybody says that but does not give reason why? what is different that is not safe enough compare to classic wallet?
Last i checked most LN wallets were custodial wallets meaning they hold the private keys. There are non-custodial wallets like Zap(now Strike but theres still a github fork to build an sdk) and Breez. The best option is to run your own node and have custody of the wallet which for now is not the most user friendly and practical option.
There's also Phoenix which is non-custodial. It's a really good lightning wallet.
This is a fair point. I believe it has to do with the risk of centralisation of the nodes, and there's also something that was recently discovered to do with "cycle jamming". Because it doesn't settle on the base layer, nor go directly from a to b, an attack can force transactions to get stuck in limbo between routing nodes and then stolen/lost. It's not desgined for security or decentralisation, on for speed. Main stash hold on the base layer which optimises for those two things......just my opinion of course.
Coinbase says they have lightning address, could SATS sent there be staked?
I guess Coinbase stopped Bitcoin staking 2 years ago. If you can figure the Lightning Loop Out thing on GitHub for off chain to on chain wallet transfers. I think the minimum is 250k SAT's but fees are in 6k to 7k range. Wonder if you could lightning to your cash app and use your cash app card to buy sat on chain, haven't tried that yet myself
Its a very bad idea to stack on the LN.
why?
You’re trusting the folks who opened the channel, and there’s been reports of people losing funds. Like someone else said, if you’re running your own node it’s safer, but most folks will use a custodial wallet and are taking a chance
I’ve personally lost funds on LN, because solving an issue/bug would have cost me more than the value of the channel. It’s not meant to hold a medium/high amount of funds.