lightning network

The explosion of lightning payments boosts the use of bitcoin

July 25, 2023


Le Lightning Network is revolutionizing the world of bitcoin payments and its rapid growth is truly impressive. This additional layer (see layer 2) enables faster and cheaper transactions, making Bitcoin a more convenient and accessible means of payment.

With the Lightning Network, users can send and receive bitcoins instantly, without having to wait for confirmations from the blockchain. This means merchants can process transactions in real time, enabling a seamless and efficient payment experience.

The growth of the Lightning Network has led to a significant increase in the adoption of Bitcoin as a payment method. As more individuals and businesses begin to use this technology, the number of bitcoin transactions is skyrocketing.

This demonstrates not only the scalability and potential of Bitcoin, but also the demand for a more efficient and cost-effective payment system. With the Lightning Network, Bitcoin becomes a real viable alternative to traditional payment methods, such as credit cards or bank transfers.

It's no longer a promise. It's a reality.

Lightning Network reaches record capacity

The Bitcoin Lightning Network has reached a record capacity of 5 BTC (the equivalent of over $000 million). More bitcoin is being introduced into Lightning Network payment channels across the world as Bitcoin holders continue to support the network's growth.

Lightning Network Bitcoin network capacity. Source : Look into Bitcoin

The Lightning Network is optimized for micropayments

The Lightning Network allows users to send or receive bitcoins (or satoshis, the smallest unit of Bitcoin) faster and more cheaply. The more capacity there is on the network, the more liquidity there is available. As a result, users can enjoy faster payment speeds and potentially higher transaction volumes.

First created in 2018, the Lightning Network, after some implementation difficulties has become a reliable payment network over the last four years. It is particularly popular in regions where micropayments are required such as El Salvador, the Isle of Man and Gibraltar.

Indeed, as recalled by Senegalese bitcoiner “Nourou” in the newspaper Cointelegraph, prices in Senegal for essential foodstuffs like milk, sugar or coffee cost a few CFA Franc (XOF), which represents around 10 euro cents. Thus, payments on the lighting network are particularly consistent in the region.

“Microtransactions are our economic reality. For Bitcoin to become the norm in the coming years, and in our economies, the Lightning Network should have sufficient capacity to support these microtransactions.”

Nourou, Cointelegraph

The different use cases of the lightning network

The Lightning Network has allowed Bitcoin to become exceptionally adapted to the era of internet usage. It has paved the way for innovative business models that were previously unimaginable or economically unviable. One such model is microtransactions.

This capability opens the door to a more granular approach and pay-per-use digital content consumption, a paradigm shift that could revolutionize industries such as online publishing, music and video streaming. Users can now pay per article, per song or per minute of content rather than subscribing to entire services.

Ainsi, le Fountain podcast service allows you to earn satoshis to people who listen to podcasts. Likewise, the Apollo review writing platform pays people in satoshis thanks to the implementation of the Lightning Network.

More recently, Nostr – an open source social media protocol – demonstrated in practice how well the Lightning Network is suited to the micropayment use case.

With Nostr, you can not only “like” a “post”, but you can also send bitcoin to the person of your choice. This feature is called “Zaps”, and four months after its release, it reached one million payments.

Source: https://stats.nostr.band

That's an impressive number for a network that is still in its infancy. The future is promising for the platform because it can represent additional motivation for content creators looking for additional income.

Bitcoin Circular Economies Drive Financial Inclusion

In recent years, the emergence of circular economies with the appearance of “bitcoin villages” around the world has marked a significant shift in the way communities interact with bitcoin.

In these villages where financial inclusion is weak or non-existent, new economic prospects have emerged. Thus, at The Zonte (Bitcoin Beach) in El Salvador – which is historically the first bitcoin village – the introduction of bitcoin has boosted the village’s economy. Many merchants have accepted payment in bitcoin and have seen an increase in their revenue. Unemployed people have launched into entrepreneurship, encouraging the emergence of new companies in the village.

The success of the El Zonte village, which welcomes more and more tourists and bitcoiners, has inspired similar projects in different regions of the world. Today, there are bitcoin villages in Senegal, the Philippines, Brazil, etc.

Thus, the inhabitants of the village “Bitcoin Ekasi” in Mossel Bay, South Africa have harnessed the power of Bitcoin and the Lightning Network to address the challenges of financial exclusion in their communities. By adopting Bitcoin as a currency, these communities have given the unbanked access to secure, low-cost, and frictionless financial transactions.

Additionally, entrepreneurs and small businesses in these regions have also benefited, as they can now participate in the global economy without the constraints of traditional banking systems and avoiding the high costs of payment processors.

The rise of circular economies Bitcoin

These circular economies help revitalize local economies by making them attractive to a global cohort of digital nomads and bitcoiners from around the world. Tourists visiting these places no longer need to worry about the costs and complexities associated with foreign exchange transactions. They can spend Bitcoins using the Lightning Network, which offers instant transactions with negligible fees.

This seamless transactional experience incentivizes tourism, leading to an influx of economic activity that can make a significant difference, particularly for communities in vulnerable situations.

The BtcMap website clearly presents merchants who accept Bitcoin via the Lightning network on its map. Today, the site has more than 240 registered communities, the largest of which has more than 150 locations accepting Bitcoin payments via the Lightning network.

Source: https://btcmap.org

We can also mention the Oshi app which also lists all events and stores that accept bitcoin around the world.

Bitcoiners ever more inclined to spend their bitcoins

A gap often separates bitcoiners: There are those who are in favor of holding (which consists of keeping your bitcoins and not spending them) and those who are for daily use of bitcoin in daily purchases.

  • Conservatives view bitcoin as a form of digital gold, a safe haven to acquire and hold in anticipation of an increase in its value.
  • On the other hand, there are those who consider bitcoin as a currency, using it for everyday transactions, embodying the original vision of Bitcoin as a “peer-to-peer electronic currency”.

Although both behaviors are valid, it is important to know that it was the introduction of the Lightning network that made it easier to spend your bitcoins. Before that, transaction fees and the slowness of transactions represented a barrier to such use.

With instant transactions and negligible fees, the barriers to daily use of Bitcoin are greatly reduced. New payment methods such as contactless payments with bitcoin cards are also contributing to the growth of Lightning. Entrepreneurs are competing with ideas to make bitcoin payment ever more user-friendly and faster, as evidenced by the bitcoin ring to pay in a “flash”, no pun intended.

bitcoin ring bitcoin payment

By spending its bitcoins, the community strengthens its legitimacy

Spending Bitcoin contributes to the currency's practical utility, fueling its acceptance and standardization in everyday commerce. Using Bitcoin as a transactional currency not only promotes the development of the infrastructure and technology necessary for widespread adoption, but also exposes more people to Bitcoin and how it works.

This form of engagement leads to greater understanding, which in turn can drive increased adoption.

Additionally, spending Bitcoin, especially in developing Bitcoin circular economies, has a tangible impact on people's lives. This supports local businesses and communities, empowers the unbanked, and contributes to the global transition to a more inclusive financial system.

By using Bitcoin as a medium of exchange, spenders are helping to demonstrate Bitcoin's resilience as a functioning monetary system. The more Bitcoin is used, the more robust and secure the network becomes, strengthening its value proposition over time.

While it is understandable that many people choose to hold on to their Bitcoins because of the potential future value, It is important to remember that the power of a currency lies not only in its stored value, but also in its utility. By spending Bitcoin, we support its growth and wider adoption, while contributing to its primary function as a currency – a medium of exchange for goods and services.

Final reflections

Despite the widespread belief that Bitcoin's utility is limited to a store of value, the development of the Lightning Network challenges this narrative, favoring everyday use of bitcoin as a digital currency.

On top of that, the permissionless nature and lack of intermediaries makes the Lightning Network an attractive alternative to traditional financial systems, as evidenced by the rise of online platforms like Nostr and the creation of Bitcoin circular economies. The success of these initiatives can be seen in vibrant communities such as Bitcoin Beach in El Salvador, Praia Bitcoin in Brazil and Bitcoin Ekasi in South Africa, where Bitcoin and the Lightning Network have provided a viable solution to financial exclusion.

Thus, the debate between those who consider Bitcoin as an asset to hold and those who consider it a currency to spend tends to disappear. The two approaches are no longer incompatible. It is crucial to remember that spending Bitcoin not only contributes to its practical utility, but also to the broader goals of financial inclusion and supporting the development of local businesses and communities.

So, in answer to the question “Are people actually using Lightning to spend Bitcoin?”, the evidence suggests that not only are people using it, but they are doing so in creative and innovative ways that were previously unthinkable.

The Lightning Network is far from just an innovation for Bitcoin enthusiasts; it is a dynamic platform that promotes innovation, financial inclusion and economic sovereignty.

What are you waiting for to try?

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