Bitcoin Adoption, Freedom Via Lightning – Bitcoin Magazine
This is an opinion piece by Paolo Ardoino, Chief Technology Officer at Bitfinex.
Ignore the avalanche (ba dum tsss) of fear, uncertainty and doubt (FUD) descending from much of the popular press: Bitcoin is here to stay.
A recent joint report by Boston Consulting Group, Bitget and Foresight Ventures estimates that the number of crypto users will reach one billion by 2030. The report pointed out that the industry is in its early adoption phase with “plenty of growth ahead.”
Despite clear signs of significant market growth in the coming years, skeptics still question the effectiveness and sustainability of cryptocurrencies such as bitcoin as a widely accepted means of payment. Specifically, the issue of scalability has repeatedly come up as a major obstacle to widespread use.
Bitcoin’s focus on security and decentralization limits its ability to handle high throughputs of transactions within the network in short periods of time. This fact is often highlighted by critics, suggesting that without the ability to quickly process giant blocks of transaction data, receiving payments for something as small as a cup of coffee will result in fees that exceed the price of the drink itself.
If Bitcoin is to live up to its full potential and become a means of payment in an alternative financial system, users must be able to perform transactions quickly and at a low cost. This is where the Lightning Network comes into play and why mass adoption of the network is crucial for Bitcoin to succeed in becoming a true alternative for everyday payments.
The Lightning Network, a second-layer protocol designed to facilitate large-scale micropayment channels, returns Bitcoin to its original purpose as a peer-to-peer payment network by taking transactions off-chain and enabling them to be completed in seconds and at a fraction of the cost.
According to data from BitcoinVisuals, the capacity of the Lightning Network has 4,700,623 bitcoin in liquidity flowing through the protocol as of this writing. With the capacity of the Lightning Network steadily increasing over the past year, even in the face of a bear market, this growth in utilization proves that the technology powering these systems is still in its infancy.
Bitcoin’s real world adoption is growing
Bitcoin has already seen rapid growth and adoption, even being adopted as legal tender in emerging economies such as El Salvador’s and the Central African Republic. The Lightning Network enables brick-and-mortar stores in these countries to accept bitcoin as payment for a Big Mac or Frappuccino, via mobile devices.
And the widespread embrace of small cryptocurrency transactions for everyday goods and services hasn’t stopped there. Payment apps such as El Salvador’s Chivo wallet offer low-cost, high-speed transactions, and Cash App integrated the Lightning Network in February, making zero-fee bitcoin payments available to its customers. With this widespread use, its popularity has increased as payment volume on the Lightning Network grew 410% in the past year. Additionally, according to a report by Arcane Research, payments on the Lightning Network were available to over 80 million people in March of this year, compared to just 100,000 people back in August 2021.
As more cryptocurrency exchanges integrate the Lightning Network into their platforms, the number of people with access to affordable, high-speed payments will only continue to grow, making the payments industry ripe for disruption. Even crypto-skeptic superpowers are taking note, as two US senators introduced legislation this summer to make small crypto transactions tax-free.
But the benefits of the Lightning Network go beyond making payments at low cost and high speed for the everyday user on the go. Some companies are even exploring how to take this tool of economic freedom and use it to protect free speech.
Protecting free speech with Bitcoin
True decentralization and economic freedom cannot happen without freedom of expression, freedom of communication and privacy. While the value of payments on the Lighting Network can be seen in its ability to expand access to cheap, high-speed cryptocurrency transactions to more people, there is another important benefit. Arcane Research’s report found that roughly 50% of activity came from peer-to-peer transactions, meaning half of Lighting Network’s activity came from quickly connecting individuals to each other.
As companies adopt Lighting Network technology, some are exploring its use for highly secure and private video conferencing or instant messaging. Much has been written about how big tech can harvest user data and sell it to the highest bidder, making this space also ripe for disruption. By providing viable alternative messaging apps like Strike, Sphinx or Bitrefill that are easy to use, fast, free and private, true decentralization can be achieved.
With wider use of the Lighting Network, questions surrounding bitcoin’s price viability and scalability can be answered quickly. Additionally, as cryptocurrency builders innovate and come up with ways to further exploit this technology, the Lighting Network may very well be the solution to protecting not only economic freedom, but also freedom of expression. With cryptocurrency on track to reach one billion users by 2030, the spread of the Lighting Network will follow as more countries and companies take advantage of its ability to quickly process data at a low cost to the consumer.
This is a guest post by Paolo Ardoino. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
