Hong Kong-based cryptocurrency exchange Bitfinex is making strides with the Lightning Network, Bitcoin’s second-layer protocol for payments. The developments have been coming fast and furiously, the latest of which involves a partnership between Bitfinex and crypto gift card startup Bitrefill, giving consumers the power to pay for goods and services with BTC on the Lightning Network. Prior to that, Bitfinex paved the way for the Bitrefill deal by announcing the addition of the Lightning Network for deposits and withdrawals, making it the first crypto exchange to integrate the technology.
Bitfinex CTO Paolo Ardoino noted that “BTB use case for Lightning Network” is kind of a big deal, giving exchange customers the ability to “live on crypto.”Source: Twitter
Lightning Network, a multi-signature smart contract atop the Bitcoin network, bolsters the scalability of the biggest blockchain, making transactions faster and cheaper. Lightning Network reportedly has the potential capacity to process millions of transactions per second (TPS), compared to traditional payments platform Visa, which processes approximately 45,000 TPS.
Bitfinex customers will gain access to a catalog of thousands of gift cards and mobile airtime refills. The Bitrefill tie-up gives consumers to pay with bitcoin across categories, from dining to entertainment, including using BTC to pay for Netflix subscriptions.
Bitrefill CEO Sergej Kotliar has big plans for the industry, saying:
“If all goes as planned, this should become the new standard for doing integrations.”
Kotliar also notes that there is no custodying of coins involved, as users withdraw bitcoin straight from their Bitfinex wallet over the Lightning Network. Payments are then sent directly to Bitrefill and transactions are settled in real-time.
The idea behind the crypto gift cards is to make it easier for the mainstream to live on cryptocurrencies. Bitrefill Chief Communications Officer John Carvalho is quoted in The Block as saying:
“We will continue to work closely with Bitfinex and other businesses to develop Lightning solutions and products that make living on crypto a reality, eventually removing dependability on fiat rails.”
While this is the “first B2B settlement process deploying the Lightning Network,” it probably won’t be the last. Bitrefill will reportedly ink more deals with industry players once the Bitfinex collaboration is running smoothly and could announce new partnerships in early 2020.
Bitfinex and Lightning Network
Bitfinex only integrated the Lightning Network to its trading platform a couple of days ago, but users already appear to be benefiting from it. The exchange reportedly has plans to expand its Lightning Network capabilities to other coins, including stablecoin Tether (USDT) and Tether Gold, the latter of which is backed by gold bullion.Source: Twitter
No doubt the trend could catch on like wildfire among cryptocurrency exchanges, all of which continue to battle for market share in a market where trading volumes have plummeted. Bitfinex volumes have tanked by as much as 10% in some coins since the crypto market downturn began during the summer months. So trading platforms must be innovative to keep customers engaged. According to a report in The Block, Kraken could be the next exchange to add Lightning Network capabilities for deposits and withdrawals.