Payments giants like Visa and Mastercard are used to process payments worldwide. Mastercard’s network is estimated to process up to 5,000 transactions per second. Visa’s transaction throughput is even more impressive, being able to process up to 24,000 transactions per second.
The Lightning Network goes much further, processing up to 1 million transactions per second.
Seems Lightning is leaving the traditional payment methods in the dust then,
Why does it have such low adoption as of now?
Advantages of Lightning
Some of the advantages of Lightning Networks include :
The user gets these three advantages bundled out of the box. And Lightning is the only technology that has tried to care for these aspects and as a result, has successfully achieved it.
I think The reason Layer-2 for Bitcoin took almost a decade to surface is, that it's not a solution just to facilitate payment, rather with Lightning, the developers are trying to bring the next evolution of Bitcoin.
Evolution of Bitcoin
Yes. you heard that right " Evolution of Bitcoin". The thing is that Bitcoin being the most decentralized and secure blockchain on the planet right now has created a new store of value.
And with Lightning Network comes the next evolution of using "bitcoin" as a medium of exchange which is backed by "Bitcoin". That is the goal that the developers tried to achieve without compromising on anything that comes with using the Bitcoin blockchain.
Just like what happened in the 1900s, when "Gold" wasn't a good medium of exchange but rather a store of value, and then came fiat currency with Gold's backing which brought a great solution for the medium of exchange. (And then they removed Gold from the picture, so we had to bring back Gold in some other form, and Bitcoin was born. Story for another time).
I will not talk about other blockchain solutions but do take a look and tell me the name of any one of the blockchains that are trying to come up with a solution that is censorship-resistant alone, then we will talk about privacy. I will give you the answer. None.
Disadvantages of Lightning
With any nascent technology comes some barriers in different forms. The same is the case with Lightning. Using Lightning comes with some barriers as follows:
- Information Barrier
- Knowledge Barrier
- Technology Barrier
Let's discuss each one of them briefly.
Currently, there is a scarcity of good and reliable sources that provides true information about Lightning Network, how it works, etc.
Worse than that, there are many more unreliable sources that are constantly spreading negativity about Lightning Networks overall (I don't know why) which is scaring the shit out of people.
Think of the time you used your first smartphone and had difficulty using it, were you able to easily set it up and started to download tons of applications during your first time holding it?
No, right. The same is now the case with the Lightning network. Using it and integrating it into your business alongside your traditional payments is a bit cumbersome at this moment in time.
Where today for getting a Visa or Mastercard POS one dedicated technician will come and install it in your workplace, that is not the case with Lightning. You have to DIY or find someone else to do it for you.
Well let me assure you. This will not be the case in the near future. Just like how Visa and master cards have dedicated teams to help people out with setting up their payment channels, I believe someday some startup will do the same by setting up Lightning payment channels for everyone.
Well, this is the barrier that will take more time as compared to the previous ones because for improving the technology there has to be wider adoption first. The lightning network is already capable of processing 1 million/second transactions with some caveats as follows :
- Payment channel
- Stuck Payments
All these will require a separate discussion of their own. But we can easily transact through Lightning networks without worrying about them for now by using trustless third-party solutions which help provide Lightning solutions like BTCPayServer.
With every new technology comes both pros and cons, we have to be wiser and weigh both of them. And in the case of Lightning Networks, the pros are way heavier than their cons. Don't take my word for it check it out yourself as everything in Bitcoin world is Open-source.
Thanks. Pk Signing off.