Lightning Network Going Mainstream
On October 23, Bakkt announced that it was supporting the new Universal Money Address (UMA) open standard for money transmission. This is being done in collaboration with Lightspark, where Bakkt will be one of its initial partners. The initial launch of the UMA-capable Lightning service will support cross-border remittances, B2B settlement, instantaneous deposits and withdrawals for trading, or globally interoperable P2P. Bakkt’s Chief Product Officer, Bitcoin & Crypto Dan O’Prey mentioned that the company was working on Lightning last fall and that investment is now bearing fruit. According to the World Bank, in June 2023 the average cost to send a remittance was 6.20% of the amount, compared with the cost of less than $0.01 for a Lightning transfer. According to Allied Market Research, the global remittance market was more than $700 billion in 2022 and is projected to grow to more than $1 trillion by 2030. The opportunity to disrupt or be disrupted is large as 6% of $1 trillion is $60 billion in fees. The Lightning Network is a second-layer payment protocol that operates on top of the bitcoin blockchain. It is designed to enable instant, high-volume micropayments between users. The Lightning Network works by creating a network of payment channels between users. These channels are essentially off-chain transactions, which means that they do not have to be broadcast to the bitcoin blockchain. This allows for much faster and cheaper transactions than would be possible on the main blockchain. Lightspark provides enterprise-grade infrastructure for the Lightning Network. It offers a suite of products and services that make it easy for businesses to send and receive payments on Lightning. Lightspark is a major supporter of the UMA and it too announced support for the open-source UMA standard in October. Bakkt was formed in 2018, with a vision to connect the digital economy. Its platform operates at the intersection of cryptocurrency (“crypto”), loyalty and rewards, and payments. It is uniquely positioned to enable consumers, brands, and financial institutions to better manage, transact with, and monetize those assets in exciting new ways. We will be hosting a fireside chat with CEO Gavin Michael and CFO Karen Alexander on Thursday, November 16, 2023, at 1:00 pm ET. Click here to register. All of WTR’s research on Bakkt is available here.
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