Lightning Network integration speeds up Bitcoin usage
Amidst all the controversy, hype and contentious debates surrounding Bitcoin, it is sometimes forgotten what its main purpose was originally intended to be. Neither a vehicle for speculation nor a place to park your wealth if gold just won’t cut it, Bitcoin was intended to enable peer-to-peer decentralized transactions. Or in other words, it is meant to be used as money, while cutting out the middlemen.
In a world envisioned by Bitcoin maximalists (who shun other cryptocurrencies, adamant that Bitcoin will consume all competition, both cryptographic and traditional), all your transactions can be completed on-chain, from grabbing a coffee to buying a house. And in fact, this is not quite as far-fetched as it may sound, as in El Salvador, BTC has been legal tender since 2021, and can be used for daily transactions.
However, an obvious obstacle to this type of adoption (even if it is only partial, and runs parallel to existing, more familiar payment methods), is the problem of scaling. Simply put, the Bitcoin network is not configured to handle this volume of throughput, it takes time to process transactions and will struggle to handle billions of microtransactions, for coffee or anything else, on a constant basis. And this is where the Lightning Network comes in.
What is the Lightning Network?
First launched in 2018, the Lightning Network is a second layer that operates on top of the Bitcoin network. It removes transactions from the main blockchain, and makes it possible to open channels between users, where transactions can take place quickly and cheaply. When users are done with their interactions and a channel is closed, all transactions made are settled back on the Bitcoin blockchain.
The result of this is simple but critical: instant payments, and Bitcoin as a viable method for everyday transactions, just as it was meant to be.
Xapo and Lightspark
This month, Xapo Bank, in partnership with Lightning Network infrastructure builder Lightspark, integrated the Lightning Network into its services, which brings two benefits. First, customers can now pay for purchases up to a value of $100 directly in BTC, with merchants who themselves use the Lightning Network.
Second, this development represents a meaningful step in changing the perception of Bitcoin, from a digital product that is exotic and on the fringes, to an asset with utility that connects to everyday life. Xapo Bank, based in Gibraltar, may be focused on crypto, but it has obtained a banking license, master membership of Visa and Mastercard, and SWIFT membership.
Buying a coffee and similar minor transactions may sound prosaic, but if Bitcoin is to fulfill its potential, it must prove capable of performing all the everyday functions currently covered by traditional currencies.
In terms of integrating crypto and traditional finance, Xapo Bank also offers USD accounts integrated with USDC stablecoin support, allowing users to easily convert between crypto and fiat, providing a seamless and independent crypto on/off ramp.
C= Liquidity
One of the most prominent supporters of the Lightning Network and its potential has been Jack Dorsey, co-founder and former CEO of Twitter. Dorsey is now focused on fintech platform Block, which he founded in 2021 (when it was known as Square), and which recently launched a service provider called c=. In case you were wondering, c= refers to speed of light portion of E = mc2and pronounced C is equal.
C= is being developed through a Block subsidiary called TBD, which aims to improve routing on the Lightning Network and solve the problem of a lack of network liquidity, which can lead to failed transactions. These are critical issues to address, but can be considered welcome issues since they reflect the type of strain caused by network adoption.
Actually, a diagram circulated last month by financial firm Valkyrie Investments indicates impressive monthly growth in Lightning Network capacity, clearly marking key developments along the way, with several related to payment application Strike, which connects Bitcoin and traditional banking, which is expanding its services.
Relay Investment
Further, Lightning-related news comes from Swiss Bitcoin-only app Relai, which specializes in allowing users to easily buy and sell BTC, keeping their own assets in a non-custodial wallet. This week, the company announced that it had raised $4.5 million in a funding round led by Ego Death Capital, a Bitcoin venture fund co-founded by influential Bitcoin attorney Jeff Booth.
In addition to upgrading to use the Lightning Network, Relais’ plans include zero-fee trading services and the launch of a white-label product that will enable other fintech platforms to offer trading between fiat and bitcoin.
Relai aims to provide user-friendly, mobile services that encourage retail trading on board Bitcoin without requiring extensive technical knowledge. This fits well with a core goal of the Lightning Network, to enable daily Bitcoin use at scale. And the goals of the Lightning Network ultimately go back to the main purpose at the foundation of the entire Bitcoin enterprise: an improved iteration of money, in a digital format.
Amidst all the controversy, hype and contentious debates surrounding Bitcoin, it is sometimes forgotten what its main purpose was originally intended to be. Neither a vehicle for speculation nor a place to park your wealth if gold just won’t cut it, Bitcoin was intended to enable peer-to-peer decentralized transactions. Or in other words, it is meant to be used as money, while cutting out the middlemen.
In a world envisioned by Bitcoin maximalists (who shun other cryptocurrencies, adamant that Bitcoin will consume all competition, both cryptographic and traditional), all your transactions can be completed on-chain, from grabbing a coffee to buying a house. And in fact, this is not quite as far-fetched as it may sound, as in El Salvador, BTC has been legal tender since 2021, and can be used for daily transactions.
However, an obvious obstacle to this type of adoption (even if it is only partial, and runs parallel to existing, more familiar payment methods), is the problem of scaling. Simply put, the Bitcoin network is not configured to handle this volume of throughput, it takes time to process transactions and will struggle to handle billions of microtransactions, for coffee or anything else, on a constant basis. And this is where the Lightning Network comes in.
What is the Lightning Network?
First launched in 2018, the Lightning Network is a second layer that operates on top of the Bitcoin network. It removes transactions from the main blockchain, and makes it possible to open channels between users, where transactions can take place quickly and cheaply. When users are done with their interactions and a channel is closed, all transactions made are settled back on the Bitcoin blockchain.
The result of this is simple but critical: instant payments, and Bitcoin as a viable method for everyday transactions, just as it was meant to be.
Xapo and Lightspark
This month, Xapo Bank, in partnership with Lightning Network infrastructure builder Lightspark, integrated the Lightning Network into its services, which brings two benefits. First, customers can now pay for purchases up to a value of $100 directly in BTC, with merchants who themselves use the Lightning Network.
Second, this development represents a meaningful step in changing the perception of Bitcoin, from a digital product that is exotic and on the fringes, to an asset with utility that connects to everyday life. Xapo Bank, based in Gibraltar, may be focused on crypto, but it has obtained a banking license, master membership of Visa and Mastercard, and SWIFT membership.
Buying a coffee and similar minor transactions may sound prosaic, but if Bitcoin is to fulfill its potential, it must prove capable of performing all the everyday functions currently covered by traditional currencies.
In terms of integrating crypto and traditional finance, Xapo Bank also offers USD accounts integrated with USDC stablecoin support, allowing users to easily convert between crypto and fiat, providing a seamless and independent crypto on/off ramp.
C= Liquidity
One of the most prominent supporters of the Lightning Network and its potential has been Jack Dorsey, co-founder and former CEO of Twitter. Dorsey is now focused on fintech platform Block, which he founded in 2021 (when it was known as Square), and which recently launched a service provider called c=. In case you were wondering, c= refers to speed of light portion of E = mc2and pronounced C is equal.
C= is being developed through a Block subsidiary called TBD, which aims to improve routing on the Lightning Network and solve the problem of a lack of network liquidity, which can lead to failed transactions. These are critical issues to address, but can be considered welcome issues since they reflect the type of strain caused by network adoption.
Actually, a diagram circulated last month by financial firm Valkyrie Investments indicates impressive monthly growth in Lightning Network capacity, clearly marking key developments along the way, with several related to payment application Strike, which connects Bitcoin and traditional banking, which is expanding its services.
Relay Investment
Further, Lightning-related news comes from Swiss Bitcoin-only app Relai, which specializes in allowing users to easily buy and sell BTC, keeping their own assets in a non-custodial wallet. This week, the company announced that it had raised $4.5 million in a funding round led by Ego Death Capital, a Bitcoin venture fund co-founded by influential Bitcoin attorney Jeff Booth.
In addition to upgrading to use the Lightning Network, Relais’ plans include zero-fee trading services and the launch of a white-label product that will enable other fintech platforms to offer trading between fiat and bitcoin.
Relai aims to provide user-friendly, mobile services that encourage retail trading on board Bitcoin without requiring extensive technical knowledge. This fits well with a core goal of the Lightning Network, to enable daily Bitcoin usage at scale. And the goals of the Lightning Network ultimately go back to the main purpose at the foundation of the entire Bitcoin enterprise: an improved iteration of money, in a digital format.
