Coinbase Sheds Light on Potential Lightning Network Disruption to $150,000,000,000 Payments Industry
Crypto exchange Coinbase claims the Lightning Network has the potential to disrupt the massive $150 billion payments industry.
Lightning Network is a layer 2 scaling solution built on Bitcoin that aims to enable instant and profitable transactions for BTC.
In a new blog post, Coinbase says the Lightning Network is targeting a more real-world use case compared to much of the speculative growth on smart contract platforms.
With Visa and Mastercard raking in an estimated $24 billion in 2021 by collecting 2-3% of every transaction made with their cards, Coinbase says the Lightning Network could be the innovation undermining the world’s biggest payment processors.
“Humble beginnings aside, the potential to turn crypto’s most valuable asset into a true medium of exchange has the power to bring greater financial inclusion to anyone with a smartphone. Profitably fiat transactions on Lightning rails without users knowing they are using Bitcoin can disrupt industries worth over $150 billion a year.
What Visa/Mastercard is for fiat currencies, Lightning can be for Bitcoin. The combination of a universally accessible payment network and the first open-source protocol for money can help Bitcoin evolve into a true global reserve currency.
While Lightning has a lot of potential, Coinbase notes that adoption is still slow. Additionally, Lightning must overcome the enormous network effects of Visa and Mastercard.
“Lightning is always cumbersome for new users and merchants. Additionally, integrating low-income users in developing countries remains a major challenge to deliver on the promise of Lightning remittances.
Finally, the lack of compliance and regulatory frameworks limits the ability of existing payment and banking service providers to integrate and serve a global customer base.
Coinbase says if Lightning Network were to be adopted in a meaningful way, we can expect developing countries with high inflation and “more smartphones than bank accounts” to lead the way.
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Feature image: Shutterstock/Liu zishan