Bitcoin Lightning Network is PayPal 2.0 in the Making For Improving Transactions..Or Is It?
Lightning Network had always attracted skeptics. It did not seem to solve bitcoin’s transaction fee problem. The network’s need to stay online at all times made its nodes susceptible to exploitation. Additionally, it didn’t solve bitcoin’s network effect problem too.
Many were asking the questions; Should the Bitcoin community have faith in Lightning Network?
Given below are a few examples of companies who have already integrated Lightning Network in their product.
Many apps are taking advantage of the low fees allowed by the lightning network.
“With Paypal, you couldn't really send an amount as low as 1,000 satoshis – or $0.06 – because their fee is higher than that,” Rui Gomes, a developer at Lightning Spin, an online gambling app running on the lightning network, said.
PayPal charges $0.05 plus a percentage fee per transaction. In other words, if you were to make a payment that small, PayPal's fees would eat the entire transaction, making it nonsensical to execute.
Gomes added, when it comes to online casinos, smaller fees are what keep the business alive, since the company can charge a small fee on every play in order to keep a consistent revenue stream.
Lightning Spin showcases how the lightning network can enable faster payments. “I've built [Lightning Spin] with the sole purpose of demonstrating that it is possible to have a betting game where you can deposit and withdraw your earnings instantly,” Gomes said.
With bitcoin by itself, users still had to wait for miner confirmation on their transactions and so couldn't cash out immediately. But with lightning, real-time payments are a breeze, as long as users already have a payment channel (or a connection with other peers on the network) established.
“Bitcoin payments can be integrated by anyone into anything without ever having to ask for permission – unlike many other systems.”, said David Knezic.
Knezic's recent contribution to lightning development is a candy dispenser that spills out M&Ms when sent a lightning payment. According to him, the fun project was meant to show how bitcoin payments can reach beyond the digital realm.
The application allows users to send a small lightning payment to purchase and paint single pixels (or the whole board for roughly $65) on an online canvas. The application garnered huge amounts of attention in June as it became a magnet for a mixture of vulgar graffiti, memes and cryptocurrency symbols which displayed the territorial battles that continue to rage in the space.
Even though payments via Lightning Network is far away from competing with PayPal, the hope is that lightning will grow easier to use as the technology matures – much like bitcoin has become since its release. As Chris Steward, a contributor to the bitcoin software said, “Lightning fits the bill for how bitcoin was advertised in 2013.”