Cryptocurrency payment gateway CoinGate is introducing Lightning Network payment processing for merchants.
At the TechCrunch Disrupt 2018 conference in San Francisco on September 5, CoinGate announced that its Lightning payment platform is now available to more than 4,000 businesses clients.
“CoinGate takes every opportunity to innovate and offer cutting-edge solutions to our users. We are keen believers in cryptocurrencies as a way to transact globally, and the Lightning Network, although still a fresh new technology, fits exactly in our vision of what Bitcoin should be in the future”, says Dmitrijus Borisenka, Co-Founder and CEO of CoinGate.
Forbes considers this as a very important development that could give a massive boost to the adoption of Bitcoin. The Lightning Network, first proposed in a 2015 white paper, creates a second level layer on top of the bitcoin blockchain, "where transactions can be passed back and forth before being added to the underlying blockchain."
Lightning Network (LN) payments couldn't be implemented in Bitcoin when the LN white paper was first issued, but the "Segregated Witness" (SegWit) tweak implemented last year permits implementing LN off-chain payments in Bitcoin.
According to CoinGate, LN technology "will eventually allow Bitcoin to be much quicker, lighter and efficient."
"To put it briefly, Lightning Network enables much faster and cheaper transactions in high volumes between users, without the need for network confirmations. In simple words, LN connects users (nodes) in a web of so-called “payment channels” independent of the actual Bitcoin network. Using these channels, transactions can be made by users (nodes) 'off-chain.'"
CoinGate states that the underlying reasoning for launching LN is "our strong belief that this technology will have a huge positive impact on Bitcoin as a whole," citing LN's ability to provide "an estimated thousand-fold increase in the capacity of the Bitcoin network," cheap and near-instant off-chain transactions, nanopayments, atomic swaps, and enhanced privacy.
In the weeks before TechCrunch Disrupt, CoinGate tested LN payments with a pilot group of over 100 merchants. "CoinGate had to make sure transactions were secure and if a mistake was to happen, the company was ready to cover the losses for their clients," notes the latest CoinGate announcement. "During the 8 weeks of testing, however, the system did not experience any major errors and was ready to sustain high volumes."
Toward LN for all users
I think LN payments could facilitate the transition of Bitcoin from "digital gold" for speculators to "digital cash" for everyday use. In my opinion, this transition, and therefore the LN, is A Good Thing, and CoinGate's implementation for merchants as well.
I am very interested in future LN implementations for user-to-user payments. Besides scalability, second level layers for off-chain payments have the potential to provide enhanced privacy, and LN technology is no exception.
Writing in Bitcoin Magazine, Aaron van Wirdum notes that LN is one of several promising technologies that could soon provide significantly enhanced privacy to the Bitcoin system, citing LN's Sphinx as an example. In the meantime, hackers are busy designing and prototyping next-generation LN solutions.
Picture from Wikimedia Commons.
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Crypto Insider Editor Giulio Prisco is a writer specialized in science, technology and business. He is persuaded that crypto has the potential to bring disruptive positive changes to the internet and society at large.