Signal Radar: Will Bitcoin’s ‘lightning network’ help make the case for crypto payment adoption?
Recent press around Bitcoin has largely focused on its impressive bull run, institutional interest (Tesla) and its potential use case as a ‘store of value’. Less widely reported advances may open the door to new commercial opportunities and address concerns its viability as a payment solution.
– This signal forms part of Hunch | Strategic Innovation Pathfinder, our proprietary cross-sector database examining changes in customer behaviour and expectations that have the potential to grow in scale and impact. –
Despite the decentralised ‘currency’ having advantages such as autonomous control and digital scarcity, Bitcoin has faced intense scrutiny around its relevance to digital commerce.
It only allows 7 payment transactions per second, which falls far short of standards set by today’s global payment processors. Concerns have also been raised around whether the cost per transaction is sustainable and whether privacy can be maintained in a system where transactions are visible to all.
These issues are being addressed directly by a large group of developers around the globe building a second layer technology on top of Bitcoin, known as the ‘Lightning Network’.
Promising ultra-low fees, uncapped real-time transactions and enhanced privacy, start-ups in the space hope this will open the door to a wide range of use cases including:
· Micropayments for content creators
· Tipping social media ‘influencers’
· Ultra-low cost international transactions
· Fast and safe machine to machine payments
Many challenges remain for now, not least the volatility of Bitcoin’s price.
However, are we witnessing the early stages of disruption of the payment status quo?
Visa, MasterCard, PayPal and Swift’s interest in the crypto space may provide an answer…