Phoenix Wallet is the latest Lightning wallet from ACINQ, the French bitcoin company known for the popular Eclair wallet. With Phoenix Wallet, using the Lightning Network should become as easy as using the simplest Bitcoin wallets. Users shouldn’t even realize they’re using the Lightning Network. You can read below whether that aim has been successful.
According to many, the Lightning Network will play an important role in the further development and adoption of Bitcoin. The Lightning Network, a second-tier scalability solution built on top of Bitcoin, improves transaction speed and capacity and enables new functionality. The technology is exciting, but it is still in its infancy and the ease of use leaves much to be desired.
With Phoenix Wallet, ACINQ aims to change that. ACINQ has long offered the popular Eclair Lightning Wallet, but nevertheless went back to the drawing board when developing Phoenix Wallet to design a wallet that was designed from the ground up with the user experience as simple as possible.
Phoenix Wallet
Phoenix Wallet is very simple indeed. Where normal Lightning Network wallets still require quite a bit of knowledge to understand exactly what you are doing, Phoenix Wallet takes most of the work off your hands.
For example, with most Lightning wallets you have to open payment channels yourself and provide them with sufficient liquidity, but Phoenix Wallet largely automates that. If there are existing channels, they are used and when new channels are needed, Phoenix Wallet automatically opens them and even supplies them with liquidity. In the event of any additional costs, the user will receive a pop-up notification that can be agreed or canceled.
The result is a remarkably simple wallet that is easy to use. Just one wallet, from which you can make both bitcoin and Lightning transactions. You don’t even have to know which of the two networks you use. For users of Phoenix Wallet it is simple: Enter the data and the amount of bitcoins, press send and Phoenix will take care of the rest.
Left: The screen to create or import wallets. Middle: Main screen with balance. Right: Settings menu.
Receive Bitcoins without Bitcoins
That is actually quite special, because in most implementations you not only have to open the channels yourself, but you also have to provide them with a bit of bitcoin to create liquidity for incoming payments. This means that in principle you cannot receive any bitcoins via the Lightning Network if you do not already own a bit of bitcoin first.
This is not necessary with Phoenix Wallet and you can receive bitcoins via the Lightning Network immediately after creating a wallet. This is not due to a technological breakthrough, but because Phoenix Wallet and ACINQ take that work off your hands and also make the necessary liquidity available.
That is of course nice for users, but it does raise questions about whether this is a sustainable model in the longer term. After all, for every new Phoenix Wallet user, ACINQ will have to spend a little bit of money to create channels and provide them with liquidity. Some of that money may return to ACINQ when the channels close, but until then they will have to advance it.
Not trust-less, but non-custodial
However, it does not matter much to the end users. Phoenix Wallet is a non-custodial wallet, which means that you manage and have full control over the private keys of your wallet. ACINQ can therefore never get away with users’ funds, because access to them is encrypted.
However, it does not work completely without trust. For the sake of ease of use, ACINQ had to make compromises: Phoenix can only connect to ACINQ’s nodes and is therefore also dependent on ACINQ’s services.
So you compromise on a number of levels. You lose a little bit of privacy, because all transaction traffic goes through ACINQ nodes and a lot can be traced from that. That in turn could lead to censorship. In addition, some (temporary) trust is required for certain actions such as exchanging bitcoins for Lightning bitcoins, because the ACINQ nodes facilitate this.
That is not ideal, the makers admit, but according to them this compromise is currently necessary to be able to offer the desired user experience. So you could argue that Phoenix Wallet is a bit of a hybrid form that falls somewhere between ‘trusted’ and ‘trustless’ .
Usage
That hybrid form seems, at least at the moment, to be a godsend. Phoenix Wallet works simply, but above all very fast. No prior knowledge about the Lightning Network is required and Phoenix Wallet looks so simple that many normal Bitcoin wallets that do not support Lightning Network seem relatively more complicated.
There are some disadvantages, as described above, but they are relatively small and since users manage their private keys themselves at all times, they always have the choice to manage their wallet via another wallet application.
You could actually compare that a bit with how normal ‘light’ Bitcoin wallets work. Even then, a node of the light wallet is often connected to the Bitcoin network and users manage their private keys themselves. Only in the case of Phoenix Wallet, that happens (mainly) on the Lightning Network.
The result is a Lightning Network experience that’s kind of what it should be. Fast, simple and without unnecessary bells and whistles. Not so easy that your grandparents could handle it, but almost. During our tests, we did get an error message once in a while, so it doesn’t work completely flawlessly yet, but in general Phoenix Wallet works very well.
Yet it also feels like it is a step in the right direction, but not quite what it should be. A bit of Bitcoiner usually prefers to stay in control as much as possible and that is simply not possible with Phoenix Wallet at the moment. But, that’s not the focus of Phoenix Wallet either. Phoenix Wallet is mainly intended to simplify the process of Lightning payments as much as possible. For advanced users, ACINQ also indicates, Eclair Wallet may be better suited.
Want to read more about Phoenix Wallet? Then take a look at the Phoenix Wallet website, or read more details in the official announcement.
