Lightning Network is a protocol that has been primarily used by Bitcoin, and CoinGate has decided to adapt their platform to use it. The protocol will help them to process payments involving merchants and works as a second-layer extension. The entire point of the Lightning Network is to help with Bitcoin’s scalability, speeding up the efficiency of every transaction.
CoinGate has been working on trying out the Lightning Network in their own system, employing the help of 100 merchants that have been adding their experience during the pilot. Bitcoin is presently accepted by 4,000 businesses, specifically in the CoinGate platform. By adding the Lightning Network to CoinGate, these same merchants will now have a speedier processing protocol.
The team for CoinGate has been working on the issue of scaling with Bitcoin for quite a while. As LN payments are processed, shoppers do not have to pay unruly fees. Furthermore, they can instantly make payments, which ensures that the merchants will be able to ship their products without the delay of pending charges.
The co-founder and CEO of CoinGate, Dmitrijus Borisenka, said,
“CoinGate takes every opportunity to innovate and offer cutting-edge solutions to our users. We are keen believers in cryptocurrencies as a way to transact globally, and the Lightning Network, although still a fresh new technology, fits exactly in our vision of what Bitcoin should be in the future.”
On LN, the connection between users is smaller, and the transactions can occur off-chain. Since the Network already ensures that the transaction is trustworthy already, they process without any confirmation on the blockchain. This allows the blockchain to have many other use cases, like high-volume micro-transactions, real-time trading, and more. The network is still in its infancy, so there is plenty of ways that it can be updated to meet the needs of Bitcoin.
Basically, LN makes processing payments easier for both merchants and shoppers, but users on CoinGate still have the option to disable it, if necessary. With the launch of the pilot, Borisenka said,
“We were pleasantly surprised when we came across tweets of our Lightning Network implementation at the Kasbah Bar in Oslo. You may have heard critics claiming, ‘you can’t buy coffee with Bitcoin’. Well, we’re not sure about coffee, but buying beer with Bitcoin within a second for zero fees is definitely possible in Oslo.”
The pilot phase is important to CoinGate to help handle the risks that may arise with off-chain payments. The protocol has not completed the testing stage, so it is not live, but CoinGate is preventing potential losses that could have sent the network crashing without the right implementation.
Luckily, there have been no problems within the 8 weeks of testing amongst about 100 different stores, located in different areas around the world, which indicates that they may be prepared for the high volumes expected.
In an email written by CoinGate, they said,
“We have processed more than 100 payments, with no single error. In the beginning, we announced that we will reimburse losses if they occur because of a network error, but it actually never happened.”
One of the participants in the trial from CoinGate has already praised it on Twitter, even though it is still not live yet.