Frank, don't you think that making everyday payments more accessible, cheaper, and faster would give commerce anywhere a breath of fresh air?
A payment made via the lightning network is significantly cheaper (often free), faster, and much more accessible than any other electronic payment method.
Merchant accounts, POS terminal rentals, purchases, replacements and repairs, processing fees, settlement times of days or weeks, and the requirement to be banked are all barriers that merchants must overcome if they wish to accept electronic payments. Bitcoin and the Lightning Network removes all of them making it trivial for anyone anywhere to have an objectively superior, global, free and instant electronic payments system that anyone and anywhere can use.
Hi! I do think more accessible, cheaper, faster payments would be good for commerce. I just don’t think crypto rails (or bitcoin specifically) achieve that though. Fees on the bitcoin L1 are too high, 6 tx per second is too low, privacy is lacking, security is bad (lose keys, lose everything with no recourse). Lightning the L2 also has scaling and user-friendliness issues. And ultimately, people don’t want to use btc to transact due to its high volatility.
I also want cheaper, faster, safer payment methods. I just don’t think btc or other crypto rails can achieve that.
Frank, I think you are misrepresenting the use cases for these tools. I was very specific about Lightning, not L1, and yet the bulk of your answer was about L1. I could similarly complain about how a wire transfer is an eminently poor method of paying for my morning coffee, or how cash is useless for cross border payments, but it wouldn't be a serious argument for obvious reasons. There are different tools for different cases. Let's compare apples to apples.
L1 is not a payments layer. It is not designed to optimize speed, cost, or privacy. It is a settlement layer designed to optimize trustlessness, permisionlessness decentralization, censorship resistance, finality, immutability, uptime, and absolute scarcity, all of which it has done flawlessly since inception.
Lightning IS a payments layer. It is designed to optimize speed, cost, and privacy. It does not have scaling issues, it SOLVES scaling issues, and while it may have an ever-receding pocket of user friendliness issues, these are already orders of magnitude easier to overcome than the alternative (getting a merchant account, installing and configuring the POS, batching at the end of the day, refilling receipt paper, inability to settle on weekends, etc…), and they’re quickly being addressed by a global swarm of volunteers without conflicts of interest.
Using lightning is cheaper than any other electronic payments system by far, and it connects you to a global interoperable payments network as opposed to having to take additional steps to accept AMEX or discover. Where I live, merchants often have a minimum for credit card transactions, say $5, or don’t even accept them at all and only take debit, even though their POS system is fully enabled for this purpose, simply because the processing costs are too high.
Bitcoin is volatile. That is definitely true. But the idea that “people don’t want to use btc to transact due to its high volatility” is becoming less and less true with time. The trend is clear, the user base of bitcoin is already larger than the population of every country save India and China. Volatility may deter some, trustlessness, permissionlessness, ease of use, censorship resistance, finality of transactions, self custody, borderlessness, security, cost of transacting, and plenty of other characteristics of bitcoin are incentives to use it. And since the volatility is unmistakably upwards in the medium and long term, this is also an incentive for many.
I have no need to use bitcoin. I live in Canada, a first world country where my position within the legacy financial system is by any standard quite privileged and the vehicles available to me are plentiful. But bitcoin has still been the best option for me in many different situations. Buying a painting from Slovakia, even buying t-shirts from my friend’s startup in the US. Hell, I sent bitcoin to a friend for her birthday while she was in El Salvador and she immediately used it to get Starbucks for herself and her friends there, no fiat conversions involved at all. Think about that. I sent her money across 4 borders, which arrived instantly, and she used it to pay for goods a few seconds later. This is a real-world example of Bitcoin's payment rails being faster, cheaper and more accessible than any alternative.
You may not think bitcoin and LN can achieve cheaper, faster, safer payments globally, but it is already doing that. And by any legitimate account, we are at the very beginning of this fast-unfolding story.
Hi, thanks for the thoughtful reply! I agree that cross-border transactions are very cumbersome and riddled with frictions (largely because of regulation, not technology per se). And if lightning provides a workaround for some people, fantastic. I think the biggest non-speculative use-case for crypto (writ large) at the moment is definitely cross-border transactions.
I just don't think that Lightning has scaling potential for payments (as a matter of engineering). See Eric Wall on twitter for a skeptical take. And I think that the volatility of bitcoin is a real issue for payments and cross-border equally, especially with the advent of stablecoins, which are not volatile but work on the same crypto rails. Lastly, I think the security and user-friendliness issues are very far from solved. So not optimistic on LN. In any case, thanks for commenting!
I wish I could have read this article earlier before I put my money into the bitcoin market 😂
Frank, don't you think that making everyday payments more accessible, cheaper, and faster would give commerce anywhere a breath of fresh air?
A payment made via the lightning network is significantly cheaper (often free), faster, and much more accessible than any other electronic payment method.
Merchant accounts, POS terminal rentals, purchases, replacements and repairs, processing fees, settlement times of days or weeks, and the requirement to be banked are all barriers that merchants must overcome if they wish to accept electronic payments. Bitcoin and the Lightning Network removes all of them making it trivial for anyone anywhere to have an objectively superior, global, free and instant electronic payments system that anyone and anywhere can use.
Hi! I do think more accessible, cheaper, faster payments would be good for commerce. I just don’t think crypto rails (or bitcoin specifically) achieve that though. Fees on the bitcoin L1 are too high, 6 tx per second is too low, privacy is lacking, security is bad (lose keys, lose everything with no recourse). Lightning the L2 also has scaling and user-friendliness issues. And ultimately, people don’t want to use btc to transact due to its high volatility.
I also want cheaper, faster, safer payment methods. I just don’t think btc or other crypto rails can achieve that.
Frank, I think you are misrepresenting the use cases for these tools. I was very specific about Lightning, not L1, and yet the bulk of your answer was about L1. I could similarly complain about how a wire transfer is an eminently poor method of paying for my morning coffee, or how cash is useless for cross border payments, but it wouldn't be a serious argument for obvious reasons. There are different tools for different cases. Let's compare apples to apples.
L1 is not a payments layer. It is not designed to optimize speed, cost, or privacy. It is a settlement layer designed to optimize trustlessness, permisionlessness decentralization, censorship resistance, finality, immutability, uptime, and absolute scarcity, all of which it has done flawlessly since inception.
Lightning IS a payments layer. It is designed to optimize speed, cost, and privacy. It does not have scaling issues, it SOLVES scaling issues, and while it may have an ever-receding pocket of user friendliness issues, these are already orders of magnitude easier to overcome than the alternative (getting a merchant account, installing and configuring the POS, batching at the end of the day, refilling receipt paper, inability to settle on weekends, etc…), and they’re quickly being addressed by a global swarm of volunteers without conflicts of interest.
Using lightning is cheaper than any other electronic payments system by far, and it connects you to a global interoperable payments network as opposed to having to take additional steps to accept AMEX or discover. Where I live, merchants often have a minimum for credit card transactions, say $5, or don’t even accept them at all and only take debit, even though their POS system is fully enabled for this purpose, simply because the processing costs are too high.
Bitcoin is volatile. That is definitely true. But the idea that “people don’t want to use btc to transact due to its high volatility” is becoming less and less true with time. The trend is clear, the user base of bitcoin is already larger than the population of every country save India and China. Volatility may deter some, trustlessness, permissionlessness, ease of use, censorship resistance, finality of transactions, self custody, borderlessness, security, cost of transacting, and plenty of other characteristics of bitcoin are incentives to use it. And since the volatility is unmistakably upwards in the medium and long term, this is also an incentive for many.
I have no need to use bitcoin. I live in Canada, a first world country where my position within the legacy financial system is by any standard quite privileged and the vehicles available to me are plentiful. But bitcoin has still been the best option for me in many different situations. Buying a painting from Slovakia, even buying t-shirts from my friend’s startup in the US. Hell, I sent bitcoin to a friend for her birthday while she was in El Salvador and she immediately used it to get Starbucks for herself and her friends there, no fiat conversions involved at all. Think about that. I sent her money across 4 borders, which arrived instantly, and she used it to pay for goods a few seconds later. This is a real-world example of Bitcoin's payment rails being faster, cheaper and more accessible than any alternative.
You may not think bitcoin and LN can achieve cheaper, faster, safer payments globally, but it is already doing that. And by any legitimate account, we are at the very beginning of this fast-unfolding story.
Glad to talk to you.
Hi, thanks for the thoughtful reply! I agree that cross-border transactions are very cumbersome and riddled with frictions (largely because of regulation, not technology per se). And if lightning provides a workaround for some people, fantastic. I think the biggest non-speculative use-case for crypto (writ large) at the moment is definitely cross-border transactions.
I just don't think that Lightning has scaling potential for payments (as a matter of engineering). See Eric Wall on twitter for a skeptical take. And I think that the volatility of bitcoin is a real issue for payments and cross-border equally, especially with the advent of stablecoins, which are not volatile but work on the same crypto rails. Lastly, I think the security and user-friendliness issues are very far from solved. So not optimistic on LN. In any case, thanks for commenting!