Accepting Bitcoin with the Lightning Network4 min read
The value of a single Bitcoin continues to grow and the world is sure to see more and more businesses looking to adopt Bitcoin as a payment option. This has happened in the past with huge corporations adopting Bitcoin but now the Bitcoin network has improved in many ways. One of those ways, in particular, is the advancement of the Lightning Network as a scaling solution.
The Lightning Network is an update to the Bitcoin payment protocol, and as an upgrade, it serves to improve several of the pain points of Bitcoin and its use as a medium of exchange. As the next wave of Bitcoin adoption continues to build momentum, look for more and more businesses looking to start accepting Bitcoin with the Lightning Network.
Before we dive into the details of explaining why using the Lightning Network will be important for businesses, let’s unpack the friction points with traditional or on-chain Bitcoin payments for businesses.
On-Chain Bitcoin transactions are slow & expensive
The two biggest points of friction with businesses that want to accept Bitcoin payments are the fact that on-chain transactions are slow and expensive. It’s true. Why would a business want to accept a payment that could take minutes or even hours to confirm? Or why would a business want to accept a payment, if the transaction fee for the payment costs more than the actual payment itself? As a business, you simply can’t afford this kind of experience.
Unfortunately, these are features of the Bitcoin network that provide the security to Bitcoin transactions and cannot be changed — but they can be improved upon. Enter the Lightning Network. Known as the second layer built on top of the Bitcoin blockchain, the Lightning Network provides an off-chain solution for Bitcoin payments to be made instantly with a fraction of the fees that come with standard Bitcoin transactions.
How does the Lightning Network improve Bitcoin payments?
The Lightning Network serves as an update to the Bitcoin payment protocol to improve the system in many ways. These improvements will remove the pain points of the past for Bitcoin adoption and will give businesses more flexibility with how they collect payments.
Instant Payments: The Lightning Network allows you to make Bitcoin payments instantly. With 1 confirmation, Bitcoin payments can be sent instantly across the Lightning Network. This means that businesses can use the Lightning Network without having to worry about their Bitcoin taking extended periods of time to be settled into their wallets.
Low Fees: With the Lightning Network, Bitcoin transactions can occur with a significantly lower fee than if they were to happen on-chain. With lower fees on transactions, businesses can accept Bitcoin payments and pay even less in fees than they would with traditional payment options like Square or Visa.
Microtransactions: With low fees and instant transactions, Bitcoin can be used for smaller transactions such as for custom game skins or a cup of coffee. With instant settlement and transaction fees at a fraction of the price of a traditional payment transaction, Bitcoin can be used for micropayments using the Lightning Network.
No Underpayments: With on-chain transactions, the price of Bitcoin can fluctuate before the transaction is settled and can cause an underpaid transaction. With Lightning Network Bitcoin payments, underpayments are impossible because the transactions are settled instantaneously.
Adding Bitcoin to your accepted payment methods can help grow your business in many ways, but by using the Lightning Network to accept Bitcoin you can benefit even further. By using the Lightning Network to accept Bitcoin you can increase your revenue by collecting payments with much smaller fees per transaction, enjoy instant payment acceptance, utilize microtransactions, and still enjoy the security of accepting Bitcoin. There are several ways to integrate Bitcoin into your business or application using the Lightning Network it just depends on what solution you need.
As a Bitcoin payment infrastructure provider, OpenNode can integrate Bitcoin into any business with both on-chain and Lightning Network payments. With a powerful API, multiple eCommerce integrations, and simple POS features, the OpenNode platform provides the ultimate solution for any business that wants to accept Bitcoin payments. Whether you want to accept Bitcoin and Hodl or convert your Bitcoin into cash, OpenNode provides a bridge to the digital economy powered by Bitcoin. Learn more about the OpenNode platform at opennode.com or send us a DM on Twitter and we’re happy to chat with you!