Blockstream Launches Lightning Micropayments For Bitcoin Apps

Bitcoin startup Blockstream debuted the new micropayments system Lightning Charge on Tuesday, which could make it easier for developers to build apps for fast, cheap bitcoin payments through an open protocol called the Lightning Network. Blockstream made waves in 2017 by launching a free bitcoin satellite network, so people around the world can access the bitcoin network even without Wi-Fi. Now they have become one of the first incumbent blockchain startups to offer Lightning-oriented tools, including a counterpart called c-lightning, tools which already power payments for t-shirts and other merchandise at the Blockstream Store.

The litecoin community is also experimenting with the Lightning Network, which is seen as one of the most promising solutions for scaling cryptocurrency networks. Lightning basically builds layers. Imagine this network as a staircase that lets people build up instead of only sideways. If there’s a long line for the bathroom downstairs, you can run upstairs. In this analogy, the crowded downstairs is on-chain bitcoin transactions while the empty upstairs bathroom represents off-chain transactions. There are around a dozen Lightning apps currently in development, all aiming to enable faster, cheaper transactions.

Offering specific numbers for how much cheaper Lightning-enabled transactions can be, especially with fiat currency, will give an inherently flawed comparison. Experts are still experimenting and figuring out the details. But for a purely hypothetical example, let’s say that if a regular bitcoin transaction cost $5 in fees and took around 10 minutes, an off-chain transaction with a layered solution could cost a millionth of the price plus be completed in just 100 milliseconds. Fees and times will still vary depending on a slew of factors, such as the payment’s value. Suffice it to say, Lightning-enabled transactions are faster, cheaper and reduce burdens on the broader bitcoin network.

Blockstream now offers a free software bundle for businesses that accept bitcoin payments, not a product or service. Israeli entrepreneur Nadav Ivgi, founder of Bitrated, worked with a couple of Blockstream developers to create Lightning Charge. “Together with him we built this new code, or this immediate piece of software that provides this nicer to use interface,” Blockstream developer Christian Decker told International Business Times. “So far the development for Lightning has been mostly on the network side of things. It’s been very much this close-knit group of people that are building it and are trying to build the infrastructure. Infrastructure is nice to have. But if nobody can actually use it then it’s not worth much, right?”

Lightning Labs CEO Elizabeth Stark tweeted salient criticism of this move, saying the software was not ready for launch. She believes this puts users’ funds at risk.

On the other hand, Decker believes real use cases provide invaluable feedback. He said new users reported around 20 bugs in the first 14 hours after the launch. Inviting people to play guinea pig with their money may sound unconventional. However, anyone is welcome to use these free tools for testnet experiments if they don’t want to jeopardize real money. “This is all very much experimental and none of the implementations are actually considered stable,” he said. “We would actually be happy if people report these types of issues and we can try to fix them together.”

Few people have the technical skills to use this payment option, even as a customer. The only way to make a Lightning-enabled bitcoin transaction is with a Lightning-friendly cryptocurrency wallet. There’s the Android Eclair app and a Zap desktop wallet being developed by wizkid college dropout Jack Mallers, who has quickly become one of the most widely respected developers in the bitcoin community. Mallers plans to release an experimental Zap beta this week, which is built on a different implementation than Blockstream's software. It will be free for people to download and play with.

“It’s with testnet coins, so not real money. This allows people to experience the Lightning network for the first time,” Mallers told IBT. “It will start the onboarding process for the mainstream audience. We’re hoping this will help bridge the gap between everyday people and the Lightning Network.” He will soon publish a website with simple tutorial videos and an FAQ page. These tips will show less tech-savvy bitcoin users how to get fake bitcoin and use it for a wide range of fake stores and peer-to-peer transactions. This beta will work like any other bitcoin wallet with a personal address.

Some developers, Mallers included, already use Zap for real bitcoin transactions. But he doesn’t recommend newbies try that. “It’s extremely risky,” Mallers said, even describing some mainnet transactions as "reckless." On the other hand, he understands why Blockstream launched so soon. “It’s really tough to replicate a real environment with billions of dollars on the line in a playground,” Mallers said. "We're also working on a mobile [Zap wallet], which people are really excited about. But we won't be releasing that quite yet."

It will be a long time until less tech-savvy bitcoin users, without programming skills, could use such products. Meanwhile Bitrefill, which allows users to pay phone bills or buy video games with bitcoin, is testing similar Lightning-enabled micropayments with real bitcoin. “We’re in good company,” Decker said.

Blockstream’s Lightning software still has a long way to go. People could lose money by using it if they are not extremely careful, and may still do so even then. Yet Decker remains optimistic. “This is basically our way of scaling bitcoin to what was promised to everybody," he said. "We would love to have this project grow and become the scaling solution that is adopted in the future.”