The Lightning Network is under development, but did you know you can already make Lightning transactions on the Bitcoin testnet? In this tutorial I explain how it works...

How does the Bitcoin Lightning Network work?

Let's say you want to give 1 Bitcoin to your friend Bob. You open a payment channel on the Lightning Network (LN) to give him 1 BTC which requires 1 transaction on the Bitcoin blockchain. You pay the BTC fees for opening the payment channel and you now have a channel where a maximum of 1 BTC can freely move between you and Bob without paying high transaction fees.
Later you open a payment channel on the LN with a Bitcoin exchange to deposit an x amount of BTC. Your friend Bob can now send up to 1 BTC to this Bitcoin exchange through your payment channel, paying you a tiny fee.

It is expected this will lead to a couple of central hubs with many connections that everyone wants to connect through. The Bitcoin exchanges are likely to play a major role in this.

How to test the Bitcoin Lightning Network

You can now try a Lightning transaction on the Bitcoin testnet. Here's how it works:

htlc.me

HTLC.me is a web-based Lightning Network wallet. There are more Lightning Network wallets available already (i.e. Eclair Wallet for Android), but I use HTLC.me in this tutorial, because it is web-based and very easy to use.

After you clicked "Got it, I wrote it down", you receive some free tBTC. This is no real Bitcoin, the "t" is for "testnet".

2. Your first payment

Visit https://yalls.org and click on an article you would like to read. To read the full article you have to pay a few tBTC Satoshis worth about $0.01.

Click 'Continue reading' and copy the payment request to your HTLC.me Lightning wallet as in the images below.

Click "Send Payment".

Now go back to the site to read the full article and you will notice that the transaction has been confirmed instantly. This got done faster than I can switch the tabs in my web browser!

Thirsty? You can now also buy a cup of coffee with a Lightning transaction on https://starblocks.acinq.co. All of this is still under development, but it looks really promising.