What is the Lightning Network?
When I'm thinking of up and coming technologies in terms of how they'd fit into my everyday life, I often forget that there are things I assume for myself that aren't nessecarily true for others. One of these things is the ease at which I can transact with people and businesses. I can move Canadian dollars to other Canadians for free and instantly. I can exchange money for goods and services from a merchant with just a tap of my phone or bank card. But this is simply not the case in third world countries where banking systems are not as mature or trusted.
Blockchain technology has enabled a number of distruptive use cases, over and above enabling something like Bitcoin. Now what we're seeing is use cases that enable anybody with internet connectivity to be able to execute transactions with others in a direct manner. A use case that builds on this idea is payment exchange in third world countries and this is built on the Lightning Network.
The Lightning Network is a layer 2 payment protocol. It is built on top of the Bitcoin network but instead of waiting up to 10 minutes for transactions to settle, this side-chain or layer 2 network can transact instantly. It's capable of making large and small transactions so it has use cases that can serve C2C, B2C and B2B.
Imagine yourself travelling through Vietnam. You bought lunch. It was $2USD. You don't have the benefit of tap to pay like in your home country. You have some local currency but you'd prefer not to keep breaking up your larger bills. Constantly converting the currency in your head to keep track of your holiday spending is taking away from the fun of your vacation. It's also harder and harder as the larger bills get broken down into smaller ones. But if you can pay through Lightning Network, you settle the transaction in Bitcoin and know exactly how much you've spent.
Or let's say you're a student in North America. Your parents are back home overseas and they need to send over some money for the year's tuition. Money transfer agents can help you move the money but at a cost. With Lightning Network, the money can be moved immediately and for little cost.
Or, let's say you're a business that needs to wire funds to your supplier. Normally, you'd go to the bank, fill out a wire transfer, hope you got all the numbers right and then wait 5 days for the money to show up in the suppliers account. With Lightning Network, that transaction can happen immediately and it can be tracked electronically to show it was received.
The market is flooded with a lot of Blockchain based projects that are still finding their way but I am confident that Lightning Network is something that's going to take off in certain parts of the world. I was able to arrange an interview with Albert Buu, the Founder and CEO of Neutronpay, a Lightning Network Service Provider (LSP) and got to deep dive into his insights on this emerging use case!