Micropayments

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?

Paying the way for Bitcoin adoption in El Salvador: Video

What is Bitcoin adoption like on the ground as peer-to-peer cash in the home of Bitcoin worldwide? Cointelegraph visits El Salvador to find out!

The Bitcoin (BTC) white paper title describes Bitcoin as a “peer-to-peer electronic cash system.” So how is Bitcoin being used as a means of exchange, or electronic cash, in the first country to adopt Bitcoin? 

Reporter Joe Hall spent a few weeks in El Salvador attempting to live off Bitcoin and Bitcoin only. He documented his trials, tribulations, successes and satoshis (the smallest amount of a Bitcoin) in a video for Cointelegraph’s YouTube channel:

Headlines from El Salvador within the crypto community have been largely positive. Moreover, statistics emanating from the country have been abundantly positive; tourism is up 30%, crime and the murder rate in El Salvador have decreased dramatically, and the Bitcoin bonds project is underway in 2023.

Nonetheless, while Bitcoin is undoubtedly one of the best-known brands worldwide; and a marketing tool that appeals to a pool of ardent Bitcoin believers around the world, its use as a means of exchange is often questioned. In El Salvador, it’s no different, as Hall explains.

Some Salvadoran vendors are laser-eyed hodlers; others made their first Bitcoin payment with Hall and were keen to ask questions and learn more.

Tipping Henry the delivery guy in Bitcoin to his Chivo wallet at 2 am. Source: Cointelegraph

Hall was surprised, dismayed, entertained and ultimately enthused by his findings in the country. Adopting a new technology as novel and misunderstood as Bitcoin is a mammoth task, but Salvadorans are getting stuck into the new technology where possible.

Retailers like Walmart had the option to pay in Bitcoin — but the process was slow and inconvenient — while the likes of Texaco were staunchly anti-Bitcoin. At McDonald’s, the experience is smooth and fast; it’s even quicker than the McDonald’s branches that accept Bitcoin in Switzerland.

From the Adopting Bitcoin conference — a Lightning conference in San Salvador that gathered Bitcoiners from around the world — down to Bitcoin Beach and Surf City, across to the volcanoes of Santa Ana and on the streets of San Salvador, Hall mingled with locals to get a better sense of Bitcoin as a means of exchange.

Related: El Salvador’s Bitcoin strategy evolved with the bear market in 2022

Hall attended the “My First Bitcoin” educational graduation ceremony at a school in El Pacheco. The founder, John Dennehy, was recently interviewed by Cointelegraph. Dennehy explained the group’s plan to remedy Bitcoin education in El Salvador by teaching teenagers how to Bitcoin.

Indeed, the recent graduates Hall interviewed at the school grasped the fundamental tenets of Bitcoin and expressed their belief that Bitcoin represents hope for the future. Watch the video to find out more.

Not medical advice: Bitcoiner implants Lightning chip to make BTC payments by hand

A Bitcoiner has literally taken the Lightning Network into his own hands, installing a tiny payment chip into his hands to make NFC contactless payments.

The Lightning Network continues to shock the Bitcoin (BTC) community. A swiss IT Professional called F418 (not his real name) surgically implanted a Lightning-enabled chip into his left hand to make Lightning Network (LN) payments.

An X-Ray demonstration of the chip implanted into F418’s hand. Source: Youtube

Speaking with Cointelegraph, F418 said he experimented with body modification and LN payments for fun. He does not recommend that Bitcoin enthusiasts take the layer-2 payments network, the LN, into their own hands as he did. “The use is just to show that it is possible and you can do stuff like that.” He added that most people carry cards, it’s just his hand has the wow factor:

“It’s funny if you are doing a presentation as I sometimes do presentations about payments and talk to people that are working in banks, and they make ‘Big Eyes’ if they see that [my hand]. You don’t need to have the implant.”

Cointelegraph first met with F418 in his home country of Switzerland at the LN-friendly Plan B Lugano Conference. His attempts to pay failed as the first implant F418 used was “Defective.” Undeterred, F418 visited a medical professional to surgically remove the implant before trying again.

The second attempt succeeded. The chip sits neatly in his left hand and can now make LN payments–without reaching for a Bolt Card or a smartphone. But does it hurt, Cointelegraph asked. “I don’t feel anything–even when I go to the gym,” he replied.

F418 taps his hand on the back of his phone to pay for two beers and some crisps. Source: Youtube

Nonetheless, F418 brings up certain risks to the procedure. While the process is medically safe, “The only problem with the implants is that you can not make them really safe. It’s not the same security as the bolt card–you can only do LNURL withdraw; it’s not safe.” 

Plus, if you make a mistake during the implantation process, it’s not a good idea to take the chip in and out of the body. It could cause harm or infection, F418 explained, so it’s best to get it the right the first time.

In brief, the NFC chip works identically implanted in F418’s hand, enabling him to make LN payments without the need for a physical device such as a smartphone or card. He can simply hold his hand near a compatible NFC reader to initiate a payment. It’s arguably the most convenient Bitcoin payment, allowing for quick and easy transactions without the need for any additional equipment.

NFC, or Near Field Communication technology use cases have bubbled up in the Bitcoin world. Indeed, NFC payments over the LN have surged in popularity since the introduction of the Bolt Card, first trialed over lunch on the Isle of Man, and now available in “Bitcoin Country,” or El Salvador.

F148 shows the tiny raised insert of the chip to Cointelegraph during a call. Source: Google Meet

It’s straightforward to set up an NFC card, sticker or even a sock to work for payments (see below Twitter video). However, it’s worth noting that F418’s NFC implant into a human is the first of its kind. F418 has made the entire process open-source and accessible–including health warnings–on GitHub. He has called the process “Lightning Paw.”

The LN is a second-layer payment protocol that operates on top of the Bitcoin blockchain. It allows for near-instant and near-free transactions by enabling users to make multiple payments without having to wait for the transactions to be confirmed on the blockchain. In essence, the LN creates a network of payment channels between users, allowing them to transact directly without the need for each transaction to be recorded on the blockchain.

Related: Subway accepts Bitcoin, so users can get a sandwich on the Lightning Network

As for F418, he continues to tinker with Bitcoin and, increasingly, the Lightning Network. IT professional and extreme sports enthusiast by day, he’s a Bitcoin hobbyist “who likes to try stupid stuff” by night. He joins thousands of Bitcoin hobbyists around the world who continue to build on Bitcoin despite the brutal bear market. Speaking from home in Switzerland, he told Cointelegraph:

“If you have an open network where everyone can do innovative things; it will always have the advantage of a closed system that only a couple of people can work on it.”

Just don’t try this at home, anon.

Satoshi milkshake experiment shows kids can HODL Bitcoin too

The famous Stanford Marshmallow Experiment takes the orange pill during a study of 25 school kids on the Isle of Man.

A Bitcoin (BTC) experiment on the Isle of Man involving the Lightning Network, 25 schoolchildren and the promise of a milkshake has yielded interesting results. 

At Willaston School on the Isle of Man (a British Crown Dependency nestled between the United Kingdom and Ireland), 25 6-year-old students, one teacher and one teaching assistant participated in the light-hearted Bitcoin study.

Location of the Isle of Man, including Bitcoin B signs for merchants that accept Bitcoin. Source: Bitcoinevents.co.uk

MSW, a data analyst at CoinCorner, told Cointelegraph that he visited the school to discuss job opportunities and to inspire the kids, discussing his own career path, which spans nuclear reactor study, data analytics and now, Bitcoin. Inevitably, the talk delved into the Lightning Network and CoinCorner’s new creation, the Lightning-enabled Bolt Card. 

“I talked a bit about Bitcoin, went through the Freddo index — how the price of a Freddo is exploding — then showed them the pound money supply over time and then asked them what they knew about Bitcoin.”

A familiar character in most Brits’ childhoods, the Freddo is a humble chocolate bar shaped like a frog. When introduced to greengrocers’ shelves at the turn of the millennium, a Freddo cost just 10p ($0.13). In 2022, Freddo costs a whopping 27p ($0.32), as shown by the following index:

Freddo chocolate bar price analysis. Source: vouchercloud.com

Despite their young ages of 10 or 11, the kids knew of Bitcoin and some of its properties. One bright spark came up with the 21 million hard cap and overall, the classroom’s sentiment toward Bitcoin was positive. At one point, MSW was even asked if buying nonfungible tokens (NFTs) is a good idea. He set them right before gifting each pupil a Bolt Card loaded with £5 credit (21,554 Satoshis or $6).

The Bolt Card is a first-of-its-kind Lightning Network-enabled card that allows near-instant payments at merchants accepting BTC. The Lightning Lunch story demonstrates how it works in detail.

MSW included an important caveat as he gifted the Bolt Card to the kids. “I sort of posed it as do you want to hodl or do you want to spend?” Having highlighted the deflationary, number go-up technology that enshrouds Bitcoin, MSM also showed the class that they could spend their Satoshis as money. Gourmet Shakes, a Bitcoin-friendly milkshake shack was a mouthwatering proposition.

One of the slide’s from MSM’s presentation. Source: MSW

MSW knew full well that the Bitcoin trial was reminiscent of the Stanford Marshmallow Experiment, a pop psychology trial from 1972. In short, the experiment attempted to understand delayed gratification in kids by offering the choice between an immediate reward or a greater prize if the children waited a period of time. The reward was either a marshmallow (hence the trial’s name) or a pretzel.

The “Isle of Man Satoshi Milkshake Experiment”—which maybe doesn’t quite have the same ring to it—yielded intriguing results. Of the 27 participants, just five people have spent their Satoshis, meaning 22 are Bitcoin HODLers.

In addition, as the experiment took place on May 29, the £5 ($5.97) of Bitcoin is now worth around £3.70 ($4.42)at the time of writing. If they want to spend their Bitcoin on a £3 milkshake, they need to act now!

MSW and the class holding the Bolt Card. Source: Willaston.sch

MSW jokes that, unfortunately, the kids are too young to have a CoinCorner account. But the experiment is worthwhile in terms of promoting Bitcoin adoption and demonstrating that spending Bitcoin is easy. Plus, it ties into a growing subcategory of Bitcoin culture, from Bitcoin children’s books to educational tools for kids to understand sound money.

Related: The UK ‘Bitcoin Adventure’ shows BTC is a family affair

The Isle of Man is fast becoming a leading European Bitcoin destination. Around 40 businesses now accept Bitcoin on the island of 85,000 people, Molly Spiers CoinCorner’s head of marketing and communications told Cointelegraph:

“We’re on a mission to make it [Isle of Man] a Bitcoin Island–have people come over and live on a Bitcoin Standard. Hotels and accommodation are ones we’re missing at the moment though.”

As for the milkshake experiment, MSM suggested that it’d be worthwhile to take a trip to see the schoolchildren before the end of this year to see how they’re HODLing, and to demonstrate how to sweep the Bitcoin from the card if they so wish.

Binance aims to become a super app with Splyt crypto partnership

The partnership with the “super app enabler” will allow users to pay for taxi services and food deliveries with crypto using Binance Pay.

The world’s largest cryptocurrency exchange, Binance has partnered with Splyt, a “super app enabler,” to bring payment options to the Binance application. Payment options made for Splyt services include cryptocurrency. 

When live, the integration will allow Binance users to pay for ridehailing services, but “also bikesharing, scooters, airport transfers, public transport and even food delivery,” a Splyt spokesperson told Cointelegraph.

As per usual, Binance CEO Changpeng Zhao, better known as “CZ,” helped to break the news on Twitter:

The news comes as some relief to Binance, which suffered issues related to “stuck transactions” on Bitcoin (BTC) withdrawals on Monday. The problem was resolved eight hours later.

A Splyt spokesperson told Cointelegraph that it would be the “first partnership in the cryptocurrency space” and faced with perilous price action with Bitcoin sub $25,000, “Splyt is enthusiastic about its development.”

“Increasingly, users are turning to their crypto wallets to pay for everyday services. […] Fully integrating everyday services as an obvious next step for crypto wallets.”

For Binance, it’s no secret they’re keen to get a foothold in the crypto payments space. For CZ, payments and app integrations are meant to up the omnipresent Binance brand awareness. Since the world has gradually reopened following the depths of the COVI-19 pandemic, CZ has undertaken a world tour, pitching crypto and Binance Pay to countries and investors all around the world.

Related: Binance Australia CEO: Regulations will establish higher standards in crypto

The report says that Binance is already used by 90 million users in over 150 countries worldwide. For Splyt, the partnership opens the door to a broad customer base:

“The other perspective is equally important: mobility and other on-demand services can dramatically increase acceptance and transaction volumes, by being available through crypto platforms, who together have hundreds of millions of users.”

Critically, as companies such as BlockFi, Gemini and most recently, Coinbase report staff reductions, the news is further evidence that Binance is doubling down into the bear market. Another feather to its cap, Binance continues to expand operations and roll out capital expenditure.

Bitcoin Lightning Network capacity charges through 4,000 BTC

The layer-2 technology built on Bitcoin now has 4,000 Bitcoin or $120 million locked up allowing for near-instant payments around the world.

There’s cause for celebration from the world’s largest cryptocurrency. The Lightning Network hit the 4,000 Bitcoin (BTC) public capacity milestone, meaning $120 million in value is ready for peer-to-peer payments.

The Lightning Network first broke the 1,000 BTC barrier in August 2020 and the 2,000 BTC barrier in July 2021. The capacity has doubled in the space of 18 months.

Lightning Network capacity growth since January 2022. Source: Glassnode.

CoinCorner CEO Daniel Scott told Cointelegraph that “we had slow and steady growth with Lightning capacity to begin, but since Jan[uary] 2021, the uptick has been strong.”

Danny Brewster, CEO of United Kingdom-based Bitcoin exchange Fast Bitcoins told Cointelegraph that Lightning Network capacity “likely passed 4K a long time ago with private channel metrics not being publicly available.”

“With that being said, the constant growth has been a great start for the Lightning Network and I foresee it continuing into the future, as long as all stakeholders, from developers to entrepreneurs building businesses continue to push forward.”

A layer-2 payment protocol built on Bitcoin’s base layer, the Lightning Network allows for near-instant transaction finality. In the following video, Paco de la India — a Bitcoin-powered world traveler — buys a pair of shorts from Mozambique-based Bitcoiner Jorge, using the Lightning Network:

Lead on-chain analyst for Glassnode, James Check, told Cointelegraph, “The expansion of Bitcoin’s Lightning Network appears to be transitioning out of the “reckless” phase, and into proper experimentation by early adopters.”

Related: The Lightning Network Lunch: A Bitcoin contactless payment story

“As wallet designs and user experience improve, more kinks can be worked out, and the network will mature. The persistent growth of public Lightning capacity and channel count is a reflection of this vote of growing confidence and growing utilization,” he said.

Scott agreed, sharing that the positive trend is likely to continue “as more companies adopt Lightning and we see more use cases come to fruition.”

“The influence of El Salvador adopting Bitcoin seems to have been an inflection point for Lightning, giving it confidence and proving a real-world use case.”

According to data from 1ML, the average and median transaction cost for sending Satoshis (the smallest denomination of a Bitcoin) over the Lightning is well under $0.01, proving it packs a punch as payment technology. 

Brewster concludes, it’s an “awesome start but a long way to go. It really is still early!”