Peer-to-peer (P2P) cryptocurrency exchange Paxful has announced that it successfully integrated lightning network into its platform. This means that 7 million of its users now enjoy instant Bitcoin (BTC) transfers.
Paxful co-founder and CEO Ray Youssef described Bitcoin as “the best financial option” but acknowledged that scalability issues could be hindering adoption. He said Lightning Network is Bitcoin’s greatest chance of achieving the scalability needed to make microtransactions a reality.
The lightning network is an innovation created in order to scale up the transaction capability of the Bitcoin blockchain. Data from Blockchain Council reveals that the average confirmation time for a BTC payment is approximately 10 minutes, and it can process a maximum of 7 transactions per second. When compared to other emerging blockchains, this is very slow.
The lightning network was first proposed by Joseph Poon and Thaddeus Dryja in 2015 and has been under development since that time. It is a decentralized layer two technology applied to the Bitcoin Blockchain that uses high-volume micropayment channels to scale the blockchain’s capability and removes the risk of delegating custody of funds to trusted third parties in order to conduct transactions more efficiently.
According to Lightning Labs’ vice president of operations, Desiree Dickerson, he states that the lightning network currently has a maximum throughput of 25 million transactions per second and settlement of transactions is instant, instead of taking 10 to 60 minutes on-chain. Lightning currently boasts over 26,500 nodes for a network capacity of 2,468.93 BTC at the time of writing.
Adding the lightning network feature gives Paxful users the ability to send and receive BTC from their Paxful Wallet in a matter of seconds and with much lower fees than existing blockchain transactions.
There’s strong reason to believe that Lightning Network will achieve wider utility on the Paxful trading platform. As of April 2021, the P2P exchange had processed over $5 billion in volume, with Africa, a region that is quickly adopting Bitcoin as a medium of exchange, emerging as one of its biggest markets.
Michael Saylor of MicroStrategy had this to say about the announcement: “soon, no Bitcoin wallet or crypto exchange will be competitive if they don’t support lightning.”