On The Contrary; BTC is Quick as Lightning

It’s about time we get out of this little funk, eh? Although it seems like the wind has been knocked out of Bitcoin it’s important to remember that BTC was trading at ~$10k this time last year. Trading sideways in what folks call a “crab market” for what feels like decades in Bitcoin years is never fun but if you zoom out and look at the bigger picture, I promise you can be as excited as I am.

What we saw at the desk

Most of the flows this week went into BTC and we’ve had some large stablecoin purchases with more in the hopper from miners looking to purchase ASICS which are on a fire sale due to the China crackdown.

Bitcoin is fast and scalable

“It costs way too much to send bitcoin. I guess I can buy a coffee with bitcoin but the transaction alone would be more expensive than the coffee”

And just yesterday, Fed Chairman Jerome Powell said bitcoin and other cryptocurrencies have “completely failed” to become a common means of payment.

By now you’ve probably heard of the lightning network. You’ve at least heard of Jack Mallers’ company Strike which allowed El Salvador to usher in Bitcoin as legal tender because of adoption levels that couldn’t be ignored. People were actually using Bitcoin — using small amounts of Bitcoin (sats) to buy everyday essentials.

Strike is one of a few apps powered by the Lightning Network. The Lightning Network acts as a second layer on top of Bitcoin that allows for off-chain settlement through a growing network of lightning channels and nodes. By settling transactions off-chain, the lightning network was designed to decongest the bitcoin blockchain and reduce transaction fees.

This second layer consists of multiple payment channels between users. Using lightning network channels, the parties can make or receive payments from each other. These transactions are processed differently than standard “on-chain” transactions as they are only updated on the main blockchain when two parties open and close a channel.

I could get way more technical here and tell you exactly how it works with an “Alice and Bob” example but that would be so 2018. The Lightning Network has come along way — so much so that you don’t need to know how it works you just have to know that it does work.

Click here to dig in a little deeper.

Visa can process 65,000 transactions per second; bitcoin can process 7 transactions per second. According to Lightning Labs, Lightning currently has a maximum throughput of 25 million transactions per second.

We don’t ask how our credit card works, we just use it. Similarly, we now have apps like Strike, BlueWallet or Fold, that do all the work on the back-end and allow you to have a relatively seamless experience as a user.

We have to remind ourselves that Bitcoin is only just over a decade old and the Lightning Network was only thought of just ~6 years ago. The smartest people in the world are working on Bitcoin. The possibilities are endless. We’re just getting started.

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