Paxful is introducing the Lightning Network on Paxful to facilitate fast transfers of bitcoin at lower fees on the platform.
The Bitcoin Lightning Network is a layer two or off-chain solution to the scalability problem. This means that it sits on top of the existing blockchain with the goal of making transactions function at “lightning” speed.
The Lightning Network has its own nodes and software, separating it from the Bitcoin network. However, it remains in constant communication with the chain through mini-ledgers called channels. Think of it as a DM (direct message) on Instagram that can facilitate fast transactions—they’re only visible to you and your counterparty.
In a statement, Paxful said:
“It’ll seamlessly blend into the Paxful platform and be integrated with the Paxful Wallet, allowing the Lightning experience to be essentially the same as it is now – only faster and cheaper, allowing you to trade and pay for goods and services at even faster rates.”
According to Elizabeth Stark, CEO, Lightning Labs, Lightning is a software layer that operates on top of the bitcoin blockchain like a decentralized VISA for bitcoin transactions.
Stark also adds that the network uses revolve around internet native payments and and financial inclusion.
According to Ray Youssef, CEO, Paxful, the company is looking at the following advantages of the network:
- Being the cheapest option for bitcoin micro-payments, the network will help to transform bitcoin from being a speculative asset to a means of exchange
- Lightning can potentially handle hundreds of thousands of transactions per second while bitcoin can handle between 5 and 10 per second
- Lightning is suited for users in emerging markets where it is being adopted for daily use
According to Elizabeth, CEO, Lightning Labs:
“With Lightning, users won’t even know they’re using Bitcoin and Lightning, much like users of the internet don’t know they’re using TCP/IP.”
– CEO, Lightning Labs
Here are extra stats and insights captured when Elizabeth Stark and Ray Youssef faced questions about the partnership:
- For a $10 transaction on Paxful via the Lightning Network, the transaction fee is (10¢) is over 97% cheaper than the transaction fee through the Bitcoin network
- Only 20-30% of people in El Salvador have access to a bank account but many more have access to a smartphone and can use bitcoin
- 32% of Nigerians have adopted bitcoin according to surveys, and 50% of the country’s population is 18 or under
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