Lightning Network

Crypto Biz: EU looks under the hood of Big Tech algorithms, Musk’s TruthGPT and more

This week’s Crypto Biz explores the fast-growing AI market, MicroStrategy’s integration with Bitcoin Lightning Network, and Microsoft’s efforts to power AI development.

Whether the intelligence can provide truthful answers will have to be seen, but the move would undoubtedly strengthen Musk’s business portfolio, which already includes SpaceX and Twitter, both companies sharing Musk’s curiosity about the universe and his approach to truth.

Speaking of facts, European authorities are strengthening regulations on AI projects by launching a new research hub to investigate Big Tech algorithms. A team of multidisciplinary experts will be in charge of looking “under the hood” of large search engines and online platforms to examine how those algorithms contribute to the spread of illegal and harmful content.

This week’s Crypto Biz looks at the latest developments in the fast-growing AI market, MicroStrategy integration with the Bitcoin Lightning Network, and Microsoft’s efforts to power AI development.

Artificial intelligence (AI) might soon answer a profound philosophical question. Finding what the truth is will be the focus of Elon Musk’s new endeavor TruthGPT, an AI dedicated to finding the fundamental nature of the universe and addressing an alleged “left-wing” bias in the industry. 

Microsoft is developing its own AI chip to power ChatGPT

Since 2019, Microsoft has been developing its own artificial intelligence chips to cut down growing costs for both its own and OpenAI projects, reducing its reliance on Nvidia’s GPUs. The move reflects a chip shortage that affected many industries worldwide during the pandemic. One of the most popular GPUs for training machine learning systems, the Nvidia H100 can be purchased for $40,000 on reseller services such as eBay amid increasing market scarcity.

MicroStrategy’s Saylor fuses work email address with Bitcoin Lightning

MicroStrategy’s CEO Michael Saylor disclosed the integration of email addresses with the Bitcoin Lightning Network, allowing transactions using emails instead of wallet addresses. In a screenshot, Saylor showed a few transactions sent to his corporate email account in the form of satoshis, the smallest unit of Bitcoin (BTC). It’s unclear if the solution is available for other MicroStrategy email addresses. The Lightning Network is a popular Bitcoin scaling solution capable of processing 1 million transactions per second at the cost of 1 satoshi per transaction.

Elon Musk to launch truth-seeking artificial intelligence platform TruthGPT

Elon Musk is developing a ChatGPT rival known as “TruthGPT,” a large language model that will be trained to explore the “nature of the universe.” During an interview with American cable network Fox News, Musk said that the truth-seeking AI would also push back against what he perceives as “left-wing” bias in the industry. ChatGPT “is programmed by left-wing experts, which train the chatbots to lie,” according to Musk. That is not the first time Musk has attacked ChatGPT; he recently spearheaded a letter calling for the halt of advanced AI development claiming societal concerns.

Before you go: OpenAI has until April 30 to comply with EU laws, ‘next to impossible’ say experts

OpenAI faces its biggest regulatory challenge as Italian authorities insist the company has until April 30 to comply with local and European data protection and privacy laws. Under the EU’s laws, tech outfits must solicit user consent to train with personal data. Companies operating in Europe must also allow Europeans to opt out of data collection and sharing. According to experts, this will be difficult for OpenAI since its models are trained on massive data troves, which are scraped from the internet and conflated into training sets.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

Bitcoin Lightning Network is 1,000x cheaper than Visa and MasterCard: Data

Glassnode data demonstrates that the Lightning Network outcompetes traditional payment networks in terms of commission costs.

Fresh data from Glassnode demonstrates that Bitcoin’s (BTC) Lightning Network is significantly cheaper to use than legacy payment networks.

The median fee rate, or the cost of sending value across the Lightning Network, is 0.0029%, 1,000 times cheaper than that of MasterCard of Visa payment processors. 

James Check, lead analyst at Glassnode, told Cointelegraph that the median fee rate, or the fee charged per 1 BTC sent across the Lightning Network, is currently 3,000 Satoshis (the smallest unit of Bitcoin). That is “equivalent to $0.84 to send $28,800 worth of value […] which is a fee of 0.0029%.”

“Pretty remarkable when you think about it.”

In a post on the Nostr social media protocol, Bitcoin analyst Dylan LeClair noted that this rate is many times less than that charged by major credit card companies. 

The Lightning Network, a layer-2 payments solution built atop the world’s largest cryptocurrency was first proposed as a way to make Bitcoin effective as a payment method. These data points demonstrate that it is not only fast but low-cost,  with the mean fee rate has been steadily trending lower since November 2021.

Source: Glassnode

Legacy payment networks such as Visa and Mastercard charge merchants a fee of around 2-3% per transaction, making them an expensive option for businesses. In an upcoming Cointelegraph documentary shot in Cape Verde, the business owner of one of the few businesses to accept Bitcoin explained that accepting foreign Visa and Mastercard costs over 8%.

Moreover, Glassnode’s Check referred to users who run their own nodes and manage their own channels. Many Lightning users take advantage of custodial wallets, such as Wallet of Satoshi and Alby to make micropayments on social media apps such as Nostr.

Some Bitcoin early adopters have noted the growing preference for custodial solutions (as the Bitcoiner mantra is “not your keys, not your coin”), although semi-custodial solutions such as Fedi and Cashu could undermine reliance on fully custodial solutions. 

Related: MicroStrategy’s Saylor fuses work email address with Bitcoin Lightning

Furthermore, the throughput of the Lightning Network could be called into question. Check explained:

“Of course, we must also consider that the typical channel is smaller than 1 BTC. The median channel size is 0.02 BTC and the mean is 0.08 BTC, so overall the Lightning Network remains well suited to payments below $1,000.”

In the below graph, the channel size is trending higher but still well under $10,000. In such an environment, payments over $1,000 may be better suited to the Bitcoin base chain in order to avoid payment failure or misfire. 

Related: Bitcoin in Senegal: Why is this African country using BTC?

Brian Armstrong promised me $100 in Bitcoin — so where is it?

Is it possible that Coinbase CEO Brian Armstrong doesn’t know how to use the Bitcoin Lightning Network? It could explain why he stiffed me.

Coinbase CEO Brian Armstrong owes me $100. That’s because he might not know how to use the Lightning Network, the instant payment solution built on top of Bitcoin.

Armstrong, who’s been building in the Bitcoin (BTC) space since 2012, recently tweeted that he would pay people who provided the “best examples” of people using cryptocurrency in Africa. “If you’re using crypto in Africa, reply with a short video (<30 seconds) or photo of how you’re using it,” Armstrong wrote. “Best few examples get $100 in crypto.”

This is the CEO of Coinbase, after all, so I shared a video of myself using Bitcoin in Africa, which was part of a 30-second segment of a recent Cointelegraph documentary covering Bitcoin in Senegal.

The tweet quickly became the most-liked and most-shared response to Armstrong’s query. (Crucially, the tweet referred to Bitcoin in Africa, not crypto in Africa, and it demonstrated the ease and speed of the Lightning Network.)

However, Armstrong appears to have ignored my submission, despite more than 600 likes and 100 retweets. The next most popular submission had just 50 likes. So, I reached out to some key opinion leaders, creators and influencers within the Bitcoin community to amplify the tweet. Wicked, an anonymous Bitcoin educator and data analyst, tagged Armstrong in a post, accusing him of “actively ignoring the #Bitcoin Lightning Network.”

Wicked very kindly drew Brian’s attention to my tweet video about Bitcoin in Africa. The tweet, and Armstrong’s affirmation that “Lightning is great and something we’ll integrate,” led to news outlets around the world reporting on Coinbase’s next development.  He then also tweeted that he had sent me the money.

Here’s where things get weird. Armstrong said he paid me the $100. He said he sent $100 to the Lightning address shown in my Twitter profile bio: Joe@Coincorner.io

Now, if you’ve never used the Lightning Network before, you’d be forgiven for confusing this address with an email address. But would the CEO of Coinbase make that mistake? Could the Bitcoin OG have failed to recognize that the request in my bio — which says “Send BTC to Joe@Coincorner.io,” surrounded by lightning bolt emojis — could be my Lightning address?

Side note: Running a Bitcoin node is mildly technical, and sending money on the Bitcoin blockchain for the first time is a little nerve-wracking, as the transaction takes roughly 10 minutes to confirm and we live in an instant world. But using the Lightning Network in 2023? It’s brain-dead easy. A walk in the park. Seriously.

“That’s a big call, Joe,” I hear you say.

Yep, it is. And I’ve got the receipts to prove it. It’s so easy to use the Lightning Network that I stand in the street in locations worldwide giving out Bitcoin to people on their brand-new Lightning wallets — and I film their reactions.

The most common remarks are “I didn’t know it’s so easy” and “Wow, it’s so fast.” The videos are on my YouTube channel. Here’s a video shot in France for the Cointelegraph YouTube channel where I give out Bitcoin:

So, please — let’s not pretend that Armstrong is overwhelmed by the complexity of sending money to my Lightning address. Moreover, funnily enough, Bitcoin advocates worldwide saw my tweet and took pleasure in sending me sats to show that my Lightning address is alive and well.

My phone blowing up with payment notifications.

Back to the story. Danny Scott, CEO of CoinCorner — a Bitcoin and Lightning company — was quick to point out to Armstrong on Twitter that he might have made a mistake in confusing Bitcoin and email, as Coinbase provides a “send to email” function.

Related: Ethereum’s Shanghai fork is coming, but it doesn’t mean investors should dump ETH

Scott told Cointelegraph in an email, “Obviously, we know the address [that Joe shared] is a Lightning address, but clearly not everybody does.”

“So my guess is Brian knows very little about Lightning right now, in particular LNURL, Lightning addresses and other innovations being built out, which is perfectly fine, he’s distracted, it happens, now we just hope he helps himself and the industry by turning their attention to what really has substance and long term value, Bitcoin and Lightning.”

It’s true: Coinbase offers trading for more than 250 different cryptocurrencies — that’s a lot of tokens to keep one’s eye on. And as Scott adds, “I can appreciate how busy he will be — this industry doesn’t sleep, and running a Bitcoin company myself, I know that feeling even at a smaller scale.”

To give Brian and ultimately Coinbase the benefit of the doubt, I waited a few days before writing this article. I have tweeted repeatedly at Brian (no reply) and I also reached out to the Coinbase Press Team. They told me that they would get to the bottom of it, but “My guess is that Brian is likely batching the sends at certain times.” A day has passed since this message (more doubt-benefit-giving) and they’ve not sent an explanation.

Related: Coinbase wins $470K restitution in insider trading case

The press team email was particularly left-field as it referred to “batching.” Batching is consolidating multiple payments into a single transaction on the Bitcoin blockchain, not the layer-2 Lightning Network. Again, they’re not familiar with Lightning. This adds further insult to injury: Could it be that the Lightning Network simply isn’t on Coinbase’s radar?

It’s been three days since Armstrong said he would send the money, and there have been some simply wonderful memes from the Bitcoin and wider crypto community.

Brian the “LN Maxi” trying to blend in. Source: @Corndalorian

Armstrong has been active on Twitter, while his company is busy launching new projects and winning insider trading cases for the over 250-plus crypto projects Coinbase hosts.

Meanwhile, I’m still waiting for my $100. But I’m also increasingly alarmed that the billionaire, crypto OG and Coinbase CEO Armstrong struggled to spot a Lightning address.

Joe Hall joined Cointelegraph as a reporter in 2021. He holds an MA in French and Spanish from the University of Edinburgh and a BA in languages from Sceinces Po Lyon.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin gaming enters Africa with local crypto exchange partnership

The Bitcoin gaming economy gets a boost from Zebedee’s expansion into Africa, complementing its Brazil and Philippines operations.

Gamers in Africa can now send and receive small amounts of Bitcoin (BTC) while playing classic titles like Counter-Strike.

Zebedee, a fintech and payments processor targeting the gaming space, has partnered with crypto exchange platform Bitnob to offer payments and gaming reward options in Africa using the Bitcoin Lightning Network (LN).

Within the partnership, African users can earn Bitcoin through Zebedee-powered apps and games. Zebedee’s offering serves as a second layer in games that allows developers to replace vague in-game points rewards with satoshis, the smallest denomination of Bitcoin. Through the partnership with Bitnob, these, in turn, can be converted to a local currency like the Nigerian nairas.

Related: Polygon becomes second-largest gaming blockchain after user activity surges in March

Zebedee’s chief strategy officer Ben Cousens explained that the partnership was driven by game developers who had Bitcoin in mind for tournaments and other gaming rewards.

“If I’m Activision Blizzard or EA Games and I have 30 million players of my games in Africa, and I run tournaments or giveaways, I cannot pay those players on fiat rails — it is too expensive. I am limited to the U.S., and I lose money from loss of engagement. Try sending $0.01 to these territories on another rail,” he said.

“This is about the $180 billion video games market, not play-and-earn or crypto gaming.”

In general, Africa has been a growing area of interest for the Lightning Network, partly due to the LN’s ability to facilitate microtransactions. Bitcoin Senegal founder Nourou told Cointelegraph, “Microtransactions are our economic reality,” hence why he and many other African builders and developers are exploring the LN. 

Gamers can already earn Bitcoin by playing popular games such as Counter-Strike. Source: Zebedee

Africa benefits from young demographics and a digitally native population. Cousens continued, “We’ve seen consistent evidence of high demand for our platform across the African continent, where the purchasing power of Bitcoin is considerably higher than markets like the U.S. and Europe.”

Indeed, the matchup of LN and gaming is a growing trend during the bear market. Cousens said it’s “A natural evolution of the interactive entertainment landscape, where ‘Rewarded Play’ (in lieu of unsustainable play-and-earn) provides meaningful performance uplift for game developers against a backdrop of slowing growth in mobile gaming revenue while engaging players in a fun and creative way.”

Magazine: ZK-rollups are ‘the endgame’ for scaling blockchains: Polygon Miden founder

The state of the Bitcoin Lightning Network in 2023

To what extent does the surge in the use of custodial wallets and difficulties in running a Lightning node undermine the Lightning Network?

The Lightning Network, a layer-2 payment solution built on top of the Bitcoin blockchain, is six years old. 

Products, users and the amount of Bitcoin (BTC) sent on the Lightning Network (LN) has sky-rocketed in 2023, despite the price per Bitcoin slipping under $20,000.

Source: Twitter/Kerooke

The LN has benefited from the integration into the Nostr protocol — in which users can send one another satoshis (small amounts of Bitcoin) — and the proliferation of custodial and noncustodial LN wallets, and its formal integration in territories such as El Salvador and Lugano.

From Mediterranean cities to Senegal, the LN is also growing as a peer-to-peer means of payment. Nonetheless, despite its growth, concerns still stymie the network, according to key opinion leaders interviewed during Advancing Bitcoin Developer Conference in London.

Eric Sirion, co-founder of Bitcoin mobile app Fedi and maintainer of the Fedimint protocol, explained that running a Lightning node in 2023 is still difficult and that some people don’t bother when faced with the complexity:

“To keep your own Lightning node running, to keep well connected, like keep your connections up to date with the nodes that are relevant — it’s a part-time job essentially.”

Matthias Koller, co-founder of Swiss company Pocket Bitcoin, said, “It has become substantially easier compared to early 2018. However, it is still not ‘easy’ for the masses.”

“But it’s exciting to see the development around full node implementations and the progress that’s been made.”

Sirion, who wrote the open-source code Fedimint and now works on the Fedi team, explained that custodial Lightning wallets, such as Wallet of Satoshi, are popular among Bitcoin advocates. He’s right: It is the wallet of choice for Nostr, a space dominated by Bitcoiners.

However, the reliance on custodial wallets could be a problem for the LN. Trusting a third party with funds, such as Wallet of Satoshi, is contrary to the Bitcoiner mantra, “not your keys, not your coins,” Sirion said.

Furthermore, Koller explained that the reason many Bitcoiners end up sidestepping the “not your keys, not your coins” mantra is that some of the custodial solutions are just so easy. “It’s set up in seconds, ready to transact,” he said, noting:

“But in fact, it’s no different from keeping Bitcoin on an exchange — it’s not your Bitcoin. It’s risky if people aren’t aware of the risks involved and the amounts kept in custodial wallets grow in size.”

However, Koller conceded that custodial solutions are fine for “pocket money.” The LN is ideal for micropayments, but even so, trusting centralized wallet providers could erode privacy. In response to the rise in custodial wallets, one Twitter user explained, “If payments are being made from custodial mobile wallets to custodial mobile wallets it’s very simple to link senders and receivers.” 

Sirion hopes that the rollout of Fedi will undermine the reliance on third parties and provide a straightforward and privacy-centric route to using Bitcoin and Lightning. Fedi uses the open-source protocol Fedimint in which trusted members of a community share ownership of Bitcoin:

“If you’re already using custodial service, at least use one where you have a reason to trust the people that are.”

Moreover, the reliance on Lightning custodial wallets could be in part due to the difficulties in running a Lightning node. Node software businesses, such as Amboss and Umbrel, attempt to remedy the issue with improved UX, but in comparison to downloading Bitcoin Core to run a Bitcoin node, there are more steps, and a deeper understanding of Bitcoin is required to run a Lightning node.

Furthermore, in the world of Venmo, Revolut and other near-instant centralized payment services, there’s a risk that Lightning’s free and frictionless payments do not necessarily solve a pressing problem. During Advancing Bitcoin, Alex Leishman, CEO of Bitcoin firm River Financial, told Cointelegraph, “Bitcoiners use Lightning mostly because it’s interesting and it’s cool. It’s not solving deep problems in their life.”

Related: Bitcoin Lightning Network growth is organic, coming from real-world adoption

Koller joked that the LN is “Bitcoin on steroids. Fast, cheap and perfect for small, daily transactions.” Plus, it’s still substantially more private than Google Pay or using Visa or Mastercard at a checkout:

“The pain I feel every time I have to use a credit card online is just gut-wrenching. Give me Lightning everywhere!”

Leishman would like to see more people working backward from real human problems observed worldwide and see where Lightning can fit in. For example, in the West, the LN could resolve inter-institutional transactions.

“It can really move the needle on a number of things in the West and in the developing world.”

In El Salvador, some Salvadorans use the Lightning Network, but cash is still king. Leishman mentions the Taro protocol, which, once implemented, could allow for assets to be issued on the Bitcoin blockchain.

“Do people actually just want dollars? And does that mean we want to try to build stablecoins on Lightning with Taro?” he said.

Taro Diagram. Source: River Financial

These assets could be deposited into Lightning Network payment channels and transacted instantly. In theory, LN users could hold several balances in their wallets, including different stablecoins or dollars.

Currently, developers can mint, send and receive Taro assets on the test network of the Bitcoin blockchain. In the meantime, LN developers will continue to seek out more user-centric Bitcoin solutions.

Why Senegal rejects the CFA and is warming to Bitcoin: Video

Why is there a groundswell toward Bitcoin adoption in Dakar? And could it influence neighboring countries and regions to explore magic internet money?

Cointelegraph goes to Senegal, West Africa. The mid-sized African nation recently hosted a Bitcoin (BTC) conference, and more and more merchants and customers are joining the Lightning Network.

Armed with a camera, a Lightning wallet and a microphone, reporter Joe Hall took to the streets of Senegal to peer under the surface of Bitcoin adoption in the capital city, Dakar.

As the Cointelegraph YouTube video highlights, Senegal has a young, digitally native population and, in recent years, it’s become second nature for people to send money via mobile phones rather than banks.

A mobile money provider called Wave, for example, began in 2017 in Senegal and has since expanded to other countries in West Africa. It now boasts millions of users. 

Much like Bitcoin, the mobile money revolution attempts to bank the unbanked and improve financial conditions for financially underserved populations. Its user experience is quite similar to sending money over Bitcoin’s Lightning Network in that you scan a QR code or send money to a number. However, mobile money charges anything from 1% to 3% and can take a few minutes to confirm. It’s therefore a useful tool, but too costly for microtransactions.

In the video, Hall sends Bitcoin over the Lightning Network to a manager at Wave, who showed interest and surprise at the Lightning Network’s efficacy. In fact, many Senegalese were interested in receiving, acquiring or learning how to custody Bitcoin.

Speakers at Senegal’s first major Bitcoin conference, DakarBtcDays.

The Dakar Bitcoin Days conference underscored the Senegalese’s interest in learning about and using Bitcoin. Founded by Nourou, Dakar Bitcoin Days is part of Bitcoin Senegal, another pocket of budding Bitcoin activity in West Africa.

However, the overarching reason which could lead to greater Bitcoin adoption in Senegal is breaking the monetary chains of its colonial past.

Related: ‘We don’t like our money’: The story of the CFA and Bitcoin in Africa

In 1994, the value of the local currency, the CFA, was sliced in half by a combination of efforts from France, the International Monetary Fund and the World Bank. Senegalese fiat savings were decimated.

The scars of this monetary collapse and its residual regime remain in West Africa and Senegal. The CFA money is not sovereign and it disempowers and disenfranchises people.

That’s why people are looking for alternatives, and some are turning to Bitcoin.

Jack Dorsey’s TBD launches C= to improve Bitcoin Lightning Network

C= (pronounced C equals) aims to further the reach of the Bitcoin Lightning Network through added liquidity and routing services.

TBD, a division of Block (formerly Square) led by CEO Jack Dorsey, launched a new venture named c= (pronounced c equals) to improve the Bitcoin Lightning Network through tools and services.

The Lightning Network (LN) is a layer 2 payment network built to ease the mainstream adoption of Bitcoin (BTC) by enabling faster, cheaper and more reliable peer-to-peer payments. However, c= aims to further the reach of LN through added liquidity and routing services.

Since its launch, the LN’s liquidity and capacity have witnessed organic growth via real-world adoption. In addition, services like c= offer incremental upgrades to support the ongoing Bitcoin adoption globally.

Visual representation of widespread Bitcoin Lightning adoption. Source: c= 

Through liquidity, services and infrastructure, c= caters to wallet users, businesses and lightning node operators for faster and cheaper payments. The official announcement read:

“We want to meet you where your lightning needs are. Are you a business looking to accept Lightning payments? A wallet in need of channels or inbound for your customers? A hardened plebnet veteran looking for your next big source?”

Layer 2 services collectively improving Bitcoin operations make it easier for people to adopt the ecosystem into their lives. If you want to accept Bitcoin as payment for your services, read Cointelegraph’s guide on how to get paid in BTC.

Related: Jack Dorsey’s decentralized Twitter rival enters app store

Jack Dorsey’s popular payments venture Cash App recently integrated crypto tax and accounting software TaxBit into its services. The move allows Bitcoin users an easy way to report taxes.

As Cointelegraph reported, Cash App launched its Bitcoin trading services in 2018 and rolled out BTC deposits the following year. The company claims to have over 10 million Bitcoin users.

Xapo Bank enables faster Bitcoin payments with Lightning Network

Xapo Bank members will now be able to instantly pay for small purchases of up to $100 at any vendor accepting Lightning payments.

Xapo Bank, an international private bank headquartered in Gibraltar, has integrated the Lightning Network to improve its Bitcoin (BTC) capabilities.

On March 2, Xapo officially announced a partnership with the Lightning Network infrastructure platform Lightspark, which allowed the firm to implement Lightning on its platform.

The integration enables faster and cheaper transactions on Xapo, reducing blockchain confirmation waiting times and transaction fees on the original Bitcoin network.

According to the firm, Xapo Bank members will now be able to instantly pay for small purchases of up to $100 at any vendor accepting Lightning payments. High-volume transactions will not initially be supported with the integration.

The new integration was introduced on Feb. 27 as part of a new update for Xapo bank’s apps on the App Store and the Google Play Store.

Lightning Network transactions on Xapo via Lightspark

According to Xapo Bank CEO Seamus Rocca, Bitcoin’s transaction confirmation can take up to one hour during periods of high usage, which makes BTC unsuitable for small daily payments like groceries. By integrating the Lightning Network, Xapo allows its customers to pay with Bitcoin without having to convert it to the U.S. dollar, he said.

Related: Bitcoin node connection shuts down: BlueWallet users urged to withdraw funds

Bitcoin average confirmation time has seen a huge spike in mid-February amid a massive activity on the Bitcoin network, with the mempool size reaching November 2022 levels. According to data from YCharts, BTC confirmation time hit nearly 600 minutes on Feb. 19.

Source: Ycharts

Rocca also noted that Bitcoin payments are especially crucial during times of hyperinflation, economic uncertainty and political turmoil.

Founded in 2013, Xapo operates a private bank as well as a Bitcoin custodian and wallet regulated by the Gibraltar Financial Services Commission. The company is known for combining traditional banking with crypto by offering USD and BTC accounts in one place.

Xapo claims that, at the peak of its Bitcoin custodianship, the firm held more than 800,000 BTC ($18.7 billion) for family offices, funds and high net-worth individuals. Such an amount of Bitcoin is more than 4% of the entire number of all BTC in circulation.

Bitcoin node connection shuts down: BlueWallet users urged to withdraw funds

BlueWallet seeks to promote self-custody solutions and greater decentralization with its decision to sever the connection to LndHub.

BlueWallet is sunsetting its lightning node connection to Lndhub, according to an official statement. BlueWallet will cease custodial lightning operations, meaning that BlueWallet users of the Bitcoin (BTC) Lightning Network must connect to nodes to continue using BlueWallet lighting services.

Calle, a lightning developer who tweeted about the change, told Cointelegraph:

“The most important thing is that people don’t panic and suddenly noobs move out their on-chain funds or wrong lightning balances.”

The Lightning Network is a layer-2 payment solution built upon Bitcoin. The Lightning Network is used to send small amounts of Bitcoin around, called satoshis or sats, often using a lightning wallet.

Blue Wallet is a popular Lightning Network wallet with over 42 BTC ($1 million) liquidity. Its largest channel has a 4 BTC ($95,000) capacity, according to data from Amboss. BlueWallet is a popular lightning wallet, often recommended by well-known Bitcoiners.

Calle continued, “It’s important to realize that lndhub is a protocol that helps you connect wallets to accounts. The wallet (in this case) is BlueWallet but other wallets also support LndHub (like Alby or Zeus).”

“The account is shutting down, not LndHub or Bluewallet itself. The account here is hosted by the BlueWallet team and they don’t want to do this anymore.”

While users will still be able to withdraw their sats, creating new or refilling existing lightning wallets on the LndHub node will no longer be possible. BlueWallet publicly stated that users with sats connected to BlueWallet’s lightning node, they should move them as soon as possible.

BlueWallet’s website advises to “keep the amount [of Bitcoin] low” for using the Lightning Network, as it’s “experimental.“ Source: bluewallet.io/lightning

The service will be shut down on April 30th, so it is crucial that BlueWallet users move their sats to another service or wallet of their choice. However, regular Bitcoin wallets are not affected by this change.

Related: Bitcoin Lightning Network growth is organic, coming from real-world adoption

While some may view the change as a thorn in the side of Lightning Network adoption, it is important to note that BlueWallet will “only support self-custody solutions,” according to the website. The change seeks to promote decentralized solutions and self-custody.

Disclaimer: Cointelegraph reached out to BlueWallet for comment. BlueWallet said to check the blog post on BlueWallet’s website.

Bitcoin Lightning Network growth is organic, coming from real-world adoption

Bitcoin Lightning Network adoption receives a boost with the launch of U.S. dollar payments and the decentralized social media platform Nostr.

The capacity of Bitcoin’s Lightning Network (LN) recently surpassed an all-time high of 5,000 Bitcoin (BTC). 

The Lightning Network is a neutral protocol built on top of Bitcoin, and it currently does not have a “native” token attached to it like many decentralized finance (DeFi) platforms.

Although the Lightning Network’s total liquidity is less than 0.5% of the Ether (ETH) in DeFi contracts, the uptrend in Bitcoin’s LN capacity versus a downtrend in the amount of ETH locked in smart contracts is encouraging for LN development.

Total ETH locked in DeFi contracts (top) and total BTC in LN channels (bottom). Source: DefiLlama

While the liquidity on the LN has been rising consistently, the number of channels on the peer-to-peer network dropped drastically in November following the FTX collapse. It could be due to an exodus of miners operating LN nodes besides running mining clients.

However, the likely end of miner capitulation and the rise of Bitcoin-based applications like nonfungible tokens could mark an end to LN channel capitulation. Since the start of 2023, over 2,000 new channels have been added to the network.

Lightning Network number of channels. Source: Glassnode

A Valkyrie Investments report states that LN adoption is picking up speed in emerging markets like South America and Africa, primarily due to efforts of the LN mobile payment application Strike.

In December 2022, the firm launched an LN-based remittance service in Africa. The service offers no-cost transfers from the United States to Africans in Nigeria, Ghana and Kenya. Later, Strike announced a similar program in the Philippines.

LN capacity and important chronological events. Source: Valkyrie

More recently, the firm announced dollar payments using LN, where users can potentially send dollars from the Strike’s cash balance to savings and Visa-enabled accounts. The app will convert U.S. dollars to BTC in the background and convert to dollars at the destination. Since LN is fast and cheap, the risk due to Bitcoin’s price volatility is minimal.

The cost of international payments from the U.S. can reach as high as $45 per transaction, with transfers taking hours or sometimes days. Thus, users may start preferring Strike-based payments over traditional remittance channels.

A recent report from Marty Bent found that the LN payments have risen this year on one of the top Lightning Network wallets, Wallet of Satoshi. Moreover, Podcasting 2.0 — a podcasting platform that accepts LN payments — also recorded an uptick in tips sent to creators.

Related: Retail giant Pick n Pay to accept Bitcoin in 1,628 stores across South Africa

Nostr is boosting LN adoption

Another factor influencing the adoption of LN is the launch of Nostr. According to the protocol’s GitHub page, Nostr is a simple, open protocol that enables global, decentralized, censorship-resistant social media. The protocol allows social media applications to be built on it.

Damus, a Twitter competitor, is built on Nostr and has an iOS and Android application. The idea of an open, free social media network reverberates strongly in the crypto space, with Bitcoin pioneers like Jack Dorsey and Adam Back having strongly endorsed Nostr.

Besides their similarities in ideology, Nostr can boost LN adoption, as Damus has integrated various LN wallets like Wallet of Satoshi, Strike, BlueWallet and others. According to a report from LN analyst Kevin Rooke, over 600,000 users have signed up for Nostr. This could help onboard users to LN, as Nostr supports the Bitcoin payment network through Nostr Zap.

While the LN does not have a native token, there is a potential for LN nodes to earn fees for facilitating transactions and providing liquidity. However, in its current state, the earnings are negligible. Hence, the Lightning Network’s growth appears to be organic, and it’s well-positioned to become the leading global payment network — as prominent personalities in the space have predicted.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.