The Lightning Network has been integrated into the Cash App, a peer-to-peer payment service operated by Block, formerly Square Inc.
The function allows transactions between parties that are not connected to the blockchain network. It was created to solve scalability issues with the leading cryptocurrency.
With a transfer rate of five transactions per second (TPS) and an average transaction price of $1.79, Bitcoin is well under the mark in terms of payments.
$1.79 is a bargain compared to April 2021 highs, when transactions averaged $62.78. However, any transaction costing more than a few cents is impractical as a widely accepted payment method.
With its Tier 2 solution, the Lightning Network offers massive scalability and low transaction costs.
It operates by diverting transactions from the main chain and placing them in peer-to-peer “payment channels” between two parties, such as a shopper and a coffee shop. Once the channel is created, it can handle infinite transactions in real time.
The payer must first block Bitcoin on the network to open a payment channel. Once the recipient is blocked, you can bill amounts based on the cost of items and services sold.
Fees are a combination of routing fees for sending payment information between Lightning Nodes and Bitcoin transaction fees for opening and closing channels. These, however, are still much smaller than direct main-chain transactions.
In November 2021, the total amount locked in USD (TVL) of the Lightning Network peaked at $216 million. Since then, TVL has been reduced.
TVL blocked on lightning network. Source: DeFiPulse
Block CEO Jack Dorsey, who was previously the CEO of Twitter, has long advocated including the tool. “It’s not an ‘if’, it’s more a ‘when,'” Stephan Livera told the podcaster in 2019 that they would combine the scaling technology with payment provider Block’s mobile app.
“We don’t think it stops buying and selling [bitcoin],” he commented.
Steve Moser, editor-in-chief of TheTapeDrive and contributor to MacRumors, tweeted in November that Cash App “is working on Lightning network integration.” Moser said he found evidence that the Cash App was gearing up to release the additional features in December.
Square’s Cash app is working on Lightning network integration. $ SQ #Bitcoin #cashapp #LightningNetwork pic.twitter.com/AzMIfU2xex
According to the latest data from Business of Apps, Cash App had over 36 million users in the US and UK.
BTC/USD is trading below $%k. Source: TradingView
Related article | Number of Bitcoin Lightning Network Nodes Increases 23% in Three Months
The Cash app isn’t the only one to add the feature
Argentina-based Belo App said on Monday that it has partnered with infrastructure provider OpenNode to enable Lightning Network access to its users.
Julie Landrum, head of growth at OpenNode, stated that the agreement allows millions of people in Latin America to perform fast Bitcoin transactions.
Last month, Ethereum blockchain software startup ConsenSys announced a solution that makes blockchain technology scalable on the Ethereum Mainnet or for private use, along with Mastercard.