Crypto exchange Coinbase says the Lightning Network has the potential to disrupt the massive $150 billion payments industry.
The Lightning Network is a layer-2 scaling solution built on top of Bitcoin that aims to enable instant and cost-effective transactions for BTC.
In a new blog post, Coinbase says the Lightning Network is targeting a more real-world use case compared to much of the speculative-driven growth of smart contract platforms.
With Visa and Mastercard pulling in around $24 billion by 2021 by collecting 2-3% of every transaction completed with their cards, Coinbase says the Lightning Network could be the innovation that undercuts the world’s biggest payment processors.
“Humble beginnings aside, the potential to turn crypto’s most valuable asset into a true medium of exchange has the power to bring greater financial inclusion to anyone with a smartphone. The ability to cost-effectively route fiat transactions over Lightning rails without users ever know they use Bitcoin, could disrupt the $150B+* a year industry.
What Visa/Mastercard is to fiat currencies, Lightning can be to Bitcoin. The combination of a universally accessible payment network on top of the world’s first open source money protocol could help Bitcoin evolve into a true global reserve currency.
While Lightning has a lot of potential, Coinbase notes that adoption is still slow. In addition, Lightning must overcome the enormous network effects of Visa and Mastercard.
“Lightning is still cumbersome for new users and sellers. In addition, adoption of low-income users in developing countries remains a major challenge to fulfilling the promise of Lightning remittances.
Finally, the lack of compliance and regulatory framework limits the ability of existing payment and banking service providers to onboard and serve a global customer base.”
Coinbase says that if the Lightning Network is meaningfully adopted, we can expect developing countries with high inflation and “more smartphones than bank accounts” to lead the way.
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