Bitcoin Payments: Something Extraordinary in the Making
From a monetary system point of view, the Bitcoin layer 1 (or base) blockchain offers global interoperability, transparency, and settlement finality with no intermediaries or central authority. In addition, the network has illustrated unparalleled security and reliability in a decade, with established immutability, 99%+ uptime, and zero hacks.
It takes time to add the new transactions to the blockchain. Consequently, base blockchain transaction speeds throughout are insufficient to support global payments. In late 2017, an upgrade to Bitcoin’s protocol formed the way for Lightning Network development, Bitcoin’s leading second-level scaling system. The Lightning Network uses off-chain payment channels to route and execute bilateral transactions at higher throughput and lower costs. Transactions are recorded on the chain after a payment channel closes.
The interoperability intrinsically present in Bitcoin and Lighting open protocols offers accessibility and universal compatibility that sparked unmatched network effects. The growing ecosystem of the Lightning Network can process hundreds of thousands of transactions per second at almost no cost. Payments benefit from the quick and final settlement, zero fraud, zero chargebacks, and Bitcoin’s base chain’s security.
The Lightning Network facilitates Bitcoin payments at scale. It is built on decentralized, peer-to-peer, open-source foundations.
Bitcoin and Lightning enable the instant and final transfer of value with minimal cost.
However, dominant providers levy traditional payment processing costs, and systemic flaws make businesses and people vulnerable to chargebacks and fraud. Businesses globally let go of significant revenue to accept payments. We all know bank wire fees, issues, and delays too well now. In 2021, the tax on global commerce and money movement neared $1.9 trillion. Losses incurred due to fraud and the cost of fraud protection are material as well. Card fraud will likely reach $40 billion per year for the next decade.
There is also a problem of Personally Identifiable Information (PII) being sold on the dark web. Bitcoin payments are a transfer value native to the Internet and designed for the future of transactions, not personal information, at minimal costs.
Bitcoin payments drastically simplify processing and improve user experience by eliminating the intermediaries, complexities, and delays inherent in the structure of traditional costs. In addition, Bitcoin payments are accessible, borderless, and just require Internet and software, unlike centralized payments. Unbounded by geography, walled gardens, and antiquated technology, Bitcoin and Lightning protocol-level innovation brings the efficient and foster application to the fore, offering lower processing costs to a thriving global ecosystem.
The Lightning Network makes Bitcoin the global standard for payments.
Bitcoin is a base settlement layer reset enabled by revolutionary technology, and the Lightning Network facilitates Bitcoin payments at scale. Simple APIs provided by managed payment providers power Bitcoin payment rails for new and traditional businesses, processors, exchanges, digital wallets, software providers, platforms, ATMs, point-of-service (POS) devices, etc.
Competitive exchange markets for on and off-ramps to all the major world currencies are set up. These fiat bridges allow users to control exposure to BTC’s price volatility completely and even negate it.
Bitcoin and Bitcoin blockchain-powered payments adoption will not come without education as with other paradigm shifts, and there is no growth without resistance. But the foundation of Bitcoin is stable, secure, and maturing, and its value proposition is strengthening. Trust and acceptance are widening beyond enthusiasts and early adopters, and since respected visionaries and forward-thinking institutions are backing it, it is helping the cause.
Bitcoin is the beginning of something extraordinary, and it will go on to empower businesses, platforms, and people everywhere to benefit from better payments for better bucks.