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Originally posted on Substack on Jan 31, 2024

Updated here Nov 15, 2024

It's a long way to the top, if you wanna Rock'N'Roll ! A practical guide how to climb the ladder of BTC LN wallets for new Bitcoin users.

This is the story of a baby user, starting his journey into Bitcoinlandia, trying to stack sats, one by one, from many different sources.

The use of each wallet app from above image is not mandatory; is just a representation of the level of complexity of each app and their functionalities.

In this guide I will explain the steps and which apps a total noob should use, in order to have a smooth journey into climbing the Bitcoin knowledge ladder.

Usually, a new Bitcoin user should start by learning the basics of Bitcoin, how onchain transactions work, how Bitcoin blocks are mined / confirmed and the most important: SELF CUSTODY IN YOUR OWN BTC WALLETS. Let’s consider you already learned these basics but right now is hard for you, as a new user with limited funds, to stack straight in onchain wallets.

Let’s consider this use case for a new user that is not a Michael Saylor to buy in chunks of thousands of BTC, but a regular user trying to stack sats, slowly, one by one, from many different sources, and cannot jump straight into onchain wallets, due to high fees and want to stack larger UTXOs (coins) in his HODL onchain wallets.

As I described in the previous guide “Be Your Own Bank - Think Like A Bank” is better to stack your BTC stash on 3 levels: HODL, CACHE, SPEND (LN). To reach that HODL level a new user must pass through spend (LN), then cache (swaps) and then to HODL (onchain vaults).

Another must read guide and have it bookmarked is “Lightning Wallets Comparison”, where as a new user you could find more technical description and functionalities of each LN wallet app described in this article.

Bitcoin Layer 2 (Lightning Network - LN): is an accounting system which lets you transact with a L1 (onchain) asset independent of the native L1 accounting system.

STEP 1 - STACKING SATS

Let’s consider that you just want to start by receiving some tips, few sats, over Lightning Network (LN), donations, small gigs paid in sats, zaps from NOSTR, doing various tasks rewarded with sats. All these small amounts are almost impossible or very costly in fees if you try to do it over onchain transactions (txs).

Even buying sats with the DCA method, every week, small amounts, from exchanges that support LN withdrawal, using the LN level as a base is much better than stacking straight into onchain wallets.

Another important aspect is that stacking on LN could offer a good level of privacy, because you can consolidate larger amounts and then send them through a swap service to your onchain vaults. Even non-KYC but custodial LN accounts could be used very well as decoy temporary stacking level until you accumulate a certain amount of sats to be moved to your own onchain wallets, in full self custody.

If you are small merchant, I recommend reading this other guide about how to operate receiving through LN.

For this 1st level, I would suggest the following process:

Wallet apps (custodial) that can be used for this 1st level, just to receive few sats without hassle:

I recommend to use as many as you can/like and spread your income through multiple sources, each one could be used better or not for specific situations.

Lightning Services for this 1st level of stacking:

STEP 2 - CACHING YOUR 1ST LEVEL OF STACK

At this level you are stacking big chunks of sats in your own custody onchain wallets.

Use multiple onchain wallets, with multiple UTXOs, multiple BTC addresses, receiving from swaps, as intermediary step, until you pile up larger amounts for your long term vaults, opening LN channels and simply caching your stash organizing your UTXOs. This is the level where you must learn how to be your bank and think like a bank.

Recommended actions for this 2nd level:

Wallet apps that can be used for this intermediary 2nd level:

I recommend to use as many as you can/like and spread your income through multiple sources, each one could be used better or not for specific situations.

STEP 3 - YOUR JOURNEY IS GETTING EXCITED

At this level, you already stacked a good amount of sats in multiple UTXOs. You already feel the rhythm of the famous AC/DC song “It’s a long way to the top, if you wanna Rock’N’Roll”.

Also is supposed that you already read and learned more about how LN works, how to run a node, how to manage channels and liquidity. This is a serious level, that suppose you have enough knowledge and you are using with responsibility your own funds. Being your own bank (at serious level) comes with great responsibility. You will realize the level of responsibility when you have enough knowledge about what you are going to do. This is the level of financial sovereignty, where you are the only one that decide for your own funds, how to be used and where.

At this level you can choose the path you want to take using Bitcoin:

Recommended actions for this 3rd level:

Wallet apps that can be used for this 3rd level:

I recommend to use as many as you can/like and spread your income through multiple sources, each one could be used better or not for specific situations.

Each of these apps have specific features and functionalities. Choose wisely the apps for your own use case, but in the same time I would recommend to use at least 2-3 of them, spreading your liquidity in multiple sources.

Additional guides I wrote about some of these apps:

CONCLUSION

As you can see, as a new Bitcoin user, the journey is not that easy, there are some steps to follow, learning all the way up about how to use specific apps with specific features, in specific moments.

There’s no such thing as “the best Bitcoin wallet” that could have all available features and provide the best experience for all use cases. Learn how to use multiple apps and manage your funds like a pro, like a real bank.

The most important thing is to understand how to split your stash in those 3 levels: HODL, CACE, SPEND. Like that you will have a smooth experience using Bitcoin and a minimal level of fees paid in future spending, keeping also a good level of privacy and security.

This article is just a simple resume from many other guides I wrote in the past, trying to put in a simple perspective the steps that should follow a new Bitcoin user. I suggest to read all my previous guides, starting with the ones listed as “additional” in this article.