Are you ready for your transactions to be processed at lightning speed?
Great news: we’re bringing the Lightning Network to Paxful. Built on top of the Bitcoin (BTC) blockchain, Lightning will allow you to transfer BTC in a matter of seconds and with much lower fees.
It’ll seamlessly blend into the Paxful platform and be integrated with the Paxful Wallet, allowing the Lightning experience to be essentially the same as it is now—only faster and cheaper, allowing you to trade and pay for goods and services at even faster rates.
To break down the announcement, we turn to Ray Youssef, Paxful CEO and Co-Founder and Elizabeth Stark, Lightning Labs CEO and Co-Founder:
Tell us about Lightning Labs—what the goal is, notable features of the Lightning Network, etc.
Elizabeth: Our goal at Lightning Labs is to bring bitcoin to billions of people. We are building the technology to make this possible with instant, high volume transactions on the Lightning Network. We build the infrastructure, and developers build the end-user applications that bring it to the users.
Why is it so easy today to send a photo in any application to anyone around the world, but it’s so difficult to send money or value? Lightning fixes this by enabling people to send global transactions and embed them in the internet. Lightning is a software layer that operates on top of the bitcoin blockchain, like a decentralized Visa for bitcoin transactions.
At its core Lightning enables two categories of applications: use cases that were not previously possible, such as internet-native payments, and access for those that previously did not have it, such as what we’re seeing in emerging markets today.
What struck you to tap the potential of Lightning? Which features of the Lightning Network are most valuable to Paxful users?
Ray: Scale, scale, scale. The Lightning Network is the cheapest option for Bitcoin micropayments, which will massively amplify Paxful’s work around leveraging how Bitcoin can be used as a means of exchange rather than a speculative asset. The Bitcoin Network is capable of handling 5 to 10 transactions per second but Lightning has the potential to process hundreds of thousands of transactions per second. This meets the demand for Bitcoin transactions while still keeping fees low. Also, Lightning’s ability to transfer micropayments is huge for Bitcoin adoption, as this will continue to push Bitcoin to be used as a means of exchange.
Why does Lightning matter to emerging markets? The larger financial industry?
Ray: Speaking to emerging markets, in countries like Nigeria and Kenya, we’re seeing people use Bitcoin for everyday uses like remittances and payments. Take Joseph Ebuka for example, a Paxful Peer in Nigeria that buys art pieces with Bitcoin. Most of his earnings are in crypto and it’s more convenient for him to pay for goods and services with Bitcoin. However, for Ebuka and countless others, micropayments on the Bitcoin Network can come with high fees. Lightning wipes these issues out. On Paxful, transaction fees via the Lightning Network will be set at a low cost, virtually free compared to alternatives. This has global implications as Bitcoin now becomes a strong financial contender for everyday transactions.
Elizabeth: Emerging markets are essential to the goal of bringing bitcoin to billions. They are the future, and in many cases have adopted technology faster than the developed world. For example, 32% of Nigerians have adopted bitcoin according to surveys, and 50% of the country’s population is 18 or under. They’re leading the world in terms of the future of bitcoin.
Access to financial services is also key. Just last week, El Salvador launched its legal tender law, where bitcoin is now officially a form of currency in the country. Only 20-30% of people in El Salvador have access to a bank account, but many more have access to a smartphone and can use bitcoin.
Lightning is also key to helping users earn bitcoin, as we’ve seen with applications like Stak in Southeast Asia and Latin America, and the numerous gaming companies that have emerged where players are able to earn money in tournaments.
Finally, there are many people around the world living in an environment of inflation, capital controls, and other financial obstacles. Bitcoin provides a way out for these people, and Lightning makes it more scalable and accessible to all. It enables anyone around the world to earn and spend money without the fear of inflation, high international transfer fees, and other ways in which wealth is devalued.
What is the Lightning Network solving? How can it boost the adoption of cryptocurrencies?
Ray: For a $10 transaction on Paxful via the Lightning Network, the transaction fee—which, in this case, is 10¢—is over 97% cheaper than the transaction fee through the Bitcoin network. That ushers in the ability to send Bitcoin payments like you do on Venmo. This gets us one step closer to Paxful being an invisible bridge for Bitcoin transactions and that’s when adoption will rocket: when the underlying technology takes a backseat within the user experience and the product experience becomes seamless.
Elizabeth: We believe deeply in solving real problems for real people, and the use case of cross-border transactions is a great one. Today people could pay up to 10% or more with existing solutions. Bitcoin provides an alternative, and over Lightning, the transactions can be instant with very low fees.
There’s also a network effect that goes along with the adoption of bitcoin and Lightning. The more people that use the technology, the more useful it is for others to use, and we’re seeing that play out now with the increasing adoption in emerging markets.
What is the potential for changing how Bitcoin is viewed?
Ray: It’s industry-shaping. By and large, Bitcoin is viewed as a speculative asset globally. We need to change that. There’s a place for HODL mentality within the Bitcoin community, but we also need to be inclusive for Bitcoin’s other use cases such as remittance, wealth preservation, and payments. Paxful’s early integration within the Lightning Network brings the industry a massive leap forward. We’re enabling Bitcoin adoption to scale by making micropayments a reality and that will benefit everyone: users, merchants, businesses, lawmakers, and economies. It will also show that Bitcoin is a reliable, cheap financial option for exchange. Some businesses may be hesitant, but we believe this has a bigger impact for the wider industry—not just now, but in the future.
Elizabeth: With Lightning, users won’t even know they’re using Bitcoin and Lightning, much like users of the internet don’t know they’re using TCP/IP. People will be able to natively and seamlessly send money in any application on the internet, similar to how they can send photos today. Bitcoin can be the protocol that underpins transacting on the internet, from cross-border payments to payments embedded in chat apps to gaming to supporting artists and creators.
Lightning can make bitcoin so ubiquitous that it underlies the way we transact on the internet. In effect, Lightning enables the internet of money. But the vast majority of users may not know it, and it will just work.
What opportunities can the network unlock in the future?
Ray: Bitcoin is the future of finance and the industry needs to get onboard. The core of the Bitcoin whitepaper spoke about leveraging a financial system for the masses—not for the wealthy, but for everyday people. Businesses need to start enabling products and services that fulfill this dream. I look forward to seeing a world where economies cater to the financial needs of the lower and middle classes. Where U.S. immigrants have an affordable option to send funds abroad, South Americans easily transfer their wealth into digital currency during times of inflation and African businesses can pay their workers at mass in Bitcoin. Paxful’s integration on the Lightning Network is pushing that mission forward and we will remain steadfast until our dream is realized.
Elizabeth: Billions of people don’t have access to credit cards today, and bitcoin over Lightning can play a major role in increasing access to digital payments. We’ll see even greater connectivity globally with more equal access to a monetary system much like how the internet provided greater access to information and educational resources. Bitcoin and Lightning will do in 10 years what the internet did for information — make it more accessible and democratized.