Lightning Network vs On-Chain Bitcoin
Bitcoin transactions can happen in two ways: on-chain (directly on the Bitcoin blockchain) or Lightning Network (a Layer 2 payment network). Each has different tradeoffs for fees, speed, and use cases.
For most everyday transactions, Lightning offers significantly lower fees and instant settlement. On-chain remains important for large transfers, final settlement, and when you need the strongest security guarantees.
Fee Comparison Explained
On-chain fees are determined by network congestion and transaction size. You pay miners based on how many virtual bytes your transaction uses. During high congestion, fees can spike dramatically.
Lightning fees consist of a small base fee (typically around 1 satoshi) plus a percentage of the payment amount. Most routes charge 0.01% to 0.1%, making Lightning dramatically cheaper for small to medium payments.
On-chain: Fee Rate (sat/vB) x Transaction Size (vBytes)Lightning: Base Fee + (Amount x Fee Rate %)Speed Comparison
On-chain transactions require miners to include them in a block. Even with high fees, this takes 10-60 minutes on average. During congestion, low-fee transactions can wait hours or even days.
Lightning payments settle in under a second. Once you have a Lightning channel open, payments route through the network almost instantaneously. This makes Lightning ideal for point-of-sale, streaming payments, and any time-sensitive use case.
When to Use Each
- Use Lightning for: Small payments, everyday transactions, micropayments, tipping, point-of-sale, streaming sats, gaming, and any time-sensitive payment.
- Use on-chain for: Large transfers, cold storage deposits, opening/closing Lightning channels, and when you need the highest security guarantees.
The Spark Advantage
Traditional Lightning requires managing channels, worrying about inbound liquidity, and keeping your node online. Spark is a Bitcoin L2 that gives you Lightning-like speed and fees without the complexity.
With Spark, you get instant transactions, minimal fees, and self-custodial Bitcoin ownership - all through a simple API that any developer can integrate.
Frequently Asked Questions
Is Lightning cheaper than on-chain?
Yes, for most transactions. Lightning fees are typically under 0.1% of the payment amount, while on-chain fees are fixed based on transaction size. For a $100 payment, Lightning might cost 10 cents while on-chain could cost $5-50 depending on congestion.
How much faster is Lightning than on-chain?
Lightning payments settle in under 1 second. On-chain transactions require at least one block confirmation (10 minutes on average) and most services wait for 3-6 confirmations (30-60 minutes) for security.
When does Lightning save money over on-chain?
Lightning is almost always cheaper for payments under $10,000. The breakeven point depends on current on-chain fees - during high congestion, even large transfers can be cheaper on Lightning.
Is Lightning as secure as on-chain Bitcoin?
Lightning has different security tradeoffs. It uses Bitcoin's security for settlement but requires either running your own node or trusting a Lightning service provider. Spark uses statechains to provide self-custody without running infrastructure.
Can I send any amount on Lightning?
Lightning has practical limits based on channel capacity. Most wallets support payments up to a few million sats ($1,000-$10,000). For larger amounts, on-chain or multiple Lightning payments work better.
What are Lightning routing fees?
When your Lightning payment travels through multiple nodes, each charges a small routing fee. These are typically 1 sat base + 0.001-0.01% of the amount. Well-connected wallets find cheap routes automatically.
Why do on-chain fees vary so much?
On-chain fees depend on block space demand. When many people want transactions confirmed, fees spike. Weekends and night hours (UTC) typically have lower fees. Lightning fees are much more stable.
What is Spark and how is it different?
Spark is a Bitcoin L2 that combines the speed and low fees of Lightning with simpler self-custody. No channels to manage, no liquidity requirements - just fast, cheap Bitcoin transactions with full ownership of your funds.
Build on Spark
Lightning-speed Bitcoin transactions with a simple API. No channels, no liquidity management, just instant payments.