Bitcoin’s Lightning Network clocked in just seconds slower than the top performing digital payment solutions on the market, including Apple Pay, however, is “days faster” for onboarding new merchants, according to research by JP Thor.
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The Lightning Network is so fast.
I wouldn’t be surprised if transactions go from wallet to wallet faster than the time it takes for a credit card machine to process the chip on a card that gets inserted.
Someone should run a test to time it and record the whole thing on video.
— Pomp 🌪 (@APompliano) February 5, 2019
Twitter user, @jpthor__, answered this challenge, however, found the true answer is not as unassuming as Pomp initially wrote.
“Sending a payment across the LN will always be faster than Visa,” JP Thor stated.
“LN payments can be processed as fast as a TCP/IP connection between two peers. A single channel has been shown to process over 250 TPS, so the network can scale to no real upper bound.”
According to the report, Apple Pay is “a couple of seconds” faster than the Lightning Network wallets.
For a fair comparison, Thor tested Mastercard Debit Card with Apple Pay, Wallet of Satoshi, a simple custodial Lightning wallet mobile application, and BlueWallet, which has both sovereign and custodial solutions.
First up, using a debit card with Apple Pay, which took less than five minutes.
Wallet of Satoshi took Thor approximately the same time, five minutes to download the app and set up the account.
However, once the app was set up, adding funds only took around one minute.
Wallet of Satoshi requires users to submit know-your-customer (KYC) verification if the customer is buying with fiat, but the validation occurred almost instantly.
Thor admits he did have all of his documents ready prior to the test.
Lastly, Thor tested both the sovereign and the custodial versions of BlueWallet but found the sovereign version to be “tech-heavy,” requiring users to set up a LNDHub. This process took Thor “well over an hour.”
“Bitcoiner Builders: we need more ways to dump fiat for Bitcoin faster,” he stated.
So, what is the advantage of using Lightning Network over Apple Pay?
To answer that question fully requires a reasonable amount of knowledge on both how fractional-reserve fiat currencies work and principles of Austrian economics.
For now, we will continue to focus on pure speed and bitcoin is “the clear winner.”
Merchant onboarding was “days faster for Bitcoin,” according to Thor.
“Getting an Eftpos terminal will always be slower. The clear winner in speed here is the Bitcoin solution. Merchants should be encouraged to adopt Bitcoin payments.”
ABOUT BITCOIN LIGHTNING NETWORK
The Lightning Network is a “Layer 2” payment protocol that operates on top of a blockchain-based cryptocurrency (like Bitcoin).
It enables fast transactions between participating nodes and has been touted as a solution to the Bitcoin scalability problem.
It features a peer-to-peer system for making micropayments of cryptocurrency through a network of bidirectional payment channels without delegating custody of funds.
Lightning Network implementation also simplifies atomic swaps.
Normal use of the Lightning Network consists of opening a payment channel by committing a funding transaction to the relevant base blockchain (Layer 1), followed by making any number of Lightning transactions that update the tentative distribution of the channel’s funds without broadcasting to the blockchain, optionally followed by closing the payment channel by broadcasting the final version of the transaction to distribute the channel’s funds.
To perform as intended, Lightning Network requires a transaction malleability fix in the Layer 1 blockchain, such as Segregated Witness (SegWit) in Bitcoin.