Emil ยท 9/7/2023

Lightning Top-Up vs Onchain: Which should you choose?

Our Lightning top-up service is an innovative solution that aims to make topping up your Lightning wallet with bitcoin both simple and fast. Although the service offers numerous advantages, there are also specific areas of application and limitations that need to be understood. With this in mind, the question arises as to which service should be used under which circumstances, especially with regard to our onchain service.

The appropriate applications for the top-up service

As the name of the new service suggests, it was primarily designed as a top-up solution. This means that it is perfect for refilling your Lightning channels with Satoshis should they run out. It particularly benefits those who want to make quick and easy payments on the Lightning network, whether shopping online, at a bitcoin conference or using specialised services like Nostr. One of the main advantages of the service is the short transaction times, which are usually only a few minutes for real-time transfers. In addition, the transaction fees in the Lightning network are low, even if there is often a one-off fee for opening the channel, as well as Pocket's usual transaction fee of 1.5%. Currently, this makes the service particularly suitable for the "spend-and-replace" scenario. You spend your Sats on a beer at the next bitcoin conference and then quickly and cheaply top up your Lightning wallet via our top-up service.

What the Lightning top-up service can't do

It is crucial to highlight that the service is not currently suitable for dollar cost averaging or bitcoin stacking. Consequently, for those who plan to hold their bitcoin for the long term, the regular Pocket service would be a better choice. The reason for this is that for every Lightning transaction, unless there is incoming liquidity, a new channel has to be opened. In such cases, channel opening fees may be incurred for each transaction respectively. This makes regular buying of bitcoin via Pocket over the Lightning network currently more expensive on balance than buying on the onchain level.

Looking to the future

In a world where onchain fees for bitcoin could potentially increase, the Lightning top-up service is an interesting alternative. The service enables transactions that are independent of onchain fees and could thus become more attractive in the future. For advanced users running their own Lightning nodes such as Umbrel or RaspiBlitz, additional features will be added in the future, including the ability to pay out Lightning purchases directly to their own node. For an overview of planned enhancements, see our Lightning Roadmap. Furthermore, buying bitcoin via Lightning will be possible directly in the Pocket App. This will enable a new user-friendly and cost-effective way of stacking bitcoin, but you'll have to be patient for this and we'll keep you updated in our blog.

The Pocket Lightning top-up service in brief

  • The aim of the Lightning top-up service: Easy and fast top-up of Lightning wallets with bitcoin
  • Primary Function: Top-up empty Lightning channels
  • Target group: People who need quick and easy credit for Lightning payments (e.g. for online shopping or for specialised services like Nostr).
  • Advantages: Fast transaction times and low fees
  • Particularly suitable for: "spend-and-replace" scenarios where empty Lightning channels need to be replenished quickly and cost-effectively
  • Not suitable for: Dollar-cost averaging or bitcoin stacking
  • Recommended (better) service for stacking: Regular Pocket Service
  • Potential Relevance: Rising onchain fees could make Lightning top-up service more attractive
  • Additional Features: More features are planned for advanced people running their own Lightning nodes
  • Integration with Pocket App: Future ability to buy bitcoin via Lightning directly in the Pocket App will provide a cost-effective and user-friendly alternative for bitcoin stacking

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