The Lightning Network is a layer-2 scaling solution for Bitcoin that is aimed at removing the limitations that are present within the base protocol. This includes the ability to pay microtransactions without having to pay miner fees and wait for 6 confirmations in order to go ahead with a transaction securely.
The way the system works is by opening payment channels on the Bitcoin blockchain, thus taking transactions between two nodes off the main chain itself. Users have to pay a fee for opening and closing channels, with the transactions in the channel being updated onto the main chain after the channel is closed.
This would allow for practically an unlimited amount of transaction throughput, elevating the TPS of Bitcoin to match with VISA and other centralized payment providers.
Currently, the network has a capacity of about 100 BTC, which translates to about $640,000, according to 1ML.
The solution will be debuted at the TechCrunch Disrupt Conference and will allow vendors to accept payments through the Lightning Network. Their release stated that shoppers will be able to pay with “minuscule” fees and get confirmations instantly. Moreover, there is no risk of chargebacks or fraud associated with the method, as it functions on the Bitcoin blockchain.
On the move, Dmitrijus Borisenka, the Co-Founder and CEO of the service stated:
“We are keen believers in cryptocurrencies as a way to transact globally, and the Lightning Network, although still a fresh new technology, fits exactly in our vision of what Bitcoin should be in the future.”
Many naysayers of the Lightning Network state that the product is still in it’s working stages, is not user-friendly and cannot be adopted easily. By effectively integrating Lightning Network into their existing solution, CoinGate promises to “dramatically” reduce these technical barriers, going so far as to say that vendors can enable or disable it with a toggle of a switch.
The CEO stated:
“You may have heard critics claiming, ‘you can’t buy coffee with Bitcoin’. Well, we’re not sure about coffee, but buying beer with Bitcoin within a second for zero fees is definitely possible in Oslo.