How to Build a Bitcoin Lottery: Technical Overview

Building a Bitcoin lottery requires combining several technologies. Here's a technical overview for developers.

Core Components

1. Lightning Network Integration

Essential for payments:

• LND, c-lightning, or Eclair node
• Or use a service like Blink, Alby, or Voltage
• Invoice generation for entries
• Outgoing payments for prizes

2. Provably Fair System

The critical component for trust:

• Use Bitcoin block hashes for randomness
• Define clear derivation method
• Document for user verification
• Never use server-generated randomness alone

3. Database

Store:

• Entries and number selections
• Payment hashes and confirmations
• Draw results and winners
• Payout records

4. Block Height Monitoring

Track the Bitcoin blockchain:

• APIs: mempool.space, blockstream.info
• Monitor for draw blocks
• Fetch block hashes when available

User Flow

1. User enters Lightning address and selects numbers
2. System generates Lightning invoice
3. User pays invoice
4. System confirms payment and registers entry
5. At draw block, system fetches hash
6. Winning number derived and winners identified
7. Automatic Lightning payments to winners

Key Technical Decisions

Hash to Number Conversion

Common approach: Extract last N numeric characters from block hash. Document publicly.

Prize Structure

Define tiers clearly - what percentage of pool goes to each tier, how are ties handled.

Payment Timing

Automate payouts immediately after draw for best user experience.

Security Considerations

• Never hold user funds: Pay-per-entry model only
• Rate limiting: Prevent abuse
• Input validation: Sanitize all user input
• Lightning security: Protect node credentials

Scaling Considerations

• Webhook-based payment confirmation vs. polling
• Database indexing for fast queries
• Batch processing for mass payouts

Study Existing Systems

Examine how platforms like Daily Thunder work - transparent operations make good case studies for implementation approaches.