Ever since the inception of cryptocurrencies, it has had the aspiration of becoming the merchant’s dream currency. Low fees, secure and fast were the terms that kept that dream alive. However, they have failed to deliver to the expectations. Is the dream now finally becoming reality?
Will lightning make the dream come true?
Around the end of December 2017, the limited capabilities of Bitcoin as a global currency had become more than clear as new users were flooding in. Heavy congestion and high fees were common problems. Many new users had negative experiences with cryptocurrency because of this, which seriously affected image of the cryptocurrency market. Behind all the big-block noise, a variety of developers had already been working on a solution for a long time.
The lightning network whitepaper was released by the Thaddeus Dryja and Joseph Poon back in 2016. The publishing of this paper was the first big step in addressing scaling issues for cryptocurrencies. After a shared start, their evolved into a couple of different directions. The Lightning Network now knows several different implementations, all of which, are close to offering a viable scaling solution.
Even though the Lightning Network seems to be the only viable solution for the scaling of cryptocurrencies. There are several issues that it should clearly solve to become the real merchant’s dream.
- Merchants just want to sell their products, not worry about the tech.
- Merchants don’t want to be limited in which currencies they can accept.
- Merchants need a simple way to manage their earnings.
Lit, the Lightning underdog
The Lit Lightning Network is one implementation of the Lightning Network that has been somewhat on the background. It is being developed by the MIT DCI and has a working implementation supporting Bitcoin, Litecoin and Vertcoin.
When you take a closer look at Lit, it is quite strange that it has been on the background this much. Perhaps it has remained on the background due to its purely academic background (rather than the profit focused alternatives), but in my opinion, Lit really has the potential to bring the original Merchant’s dream back. Like other Lightning Network implementations, it offers near instant payments and extremely low fees. However, Lit stands out from other Lightning Network implementations by offering coin agnostic payments.
Coin agnostic payments solve one of the main problems for merchants. It means that as a merchant you can receive payments without worrying about which currency the person wants to pay you in (as long as that coin has implemented Lit). There are no profit incentives, which could lead to fewer commercial forces that influence the development direction of the implementation.
Like I said, a coin needs to add themselves to Lit in order to be able to be a part in the coin agnostic payment system. For a lot of native Segwit currencies, this implementation could be quite trivial (as simple as adding a config to Lit), which means Lit can help a lot of different currencies to scale.
One of the cryptocurrencies which is investing a lot of time into the Lit implementation specifically is Vertcoin. They are currently developing the first known lightning network wallet where multi-coin support is built directly in, potentially allowing for transactions in all native Segwit cryptocurrencies.
Ideas that solve merchant problems
Not every store owner has the time or desire to set-up complex payment methods, worry about security and configure point-of-sale solutions. And let’s be honest, that is the current harsh reality of the Lightning Network. Most merchants just want to receive payments.
The Lightning community doesn’t sit still though. We have seen user-friendly lightning wallets such as Zap and cool Lightning Network stickers pop up. Plenty of merchants seem more than eager to accept Lightning as the way to go. But what about those other hurdles I mentioned? Two concepts have set out to address some of the Merchant’s problems specifically; Lit-Box and Lit-PoS solutions.
The Lightning Network presents an interesting challenge. In order to send or receive transactions, users need to be online at all times. This is not very practical, and makes the merchant dream nothing more than that.
In order to solve this, users and merchants are presented with two choices. Either they could give away control of their funds to a third party; having them manage it for them. This would trouble the Lightning Network with some trust issue, intermediaries, higher fees and ultimately something that eerily resembles the current banking system.
Alternatively, users could have a device, similar to a small home router, that manages all the Lightning transactions. This is the only option that lets the users control their funds completely. This concept device was dreamed up in early 2018 by Vertcoin deveoper & MIT DCI researcher James Lovejoy, who dubbed it “Lit-Box”.
For the Lightning network to solve the merchants’ problems, capable and easy to use Point-of-Sale(PoS) solutions are essential. The work on Lit point-of-sale solutions has seen some good progress, with recent commits to Lit for enabling card payments and the idea called Lit-PoS.
Lit-PoS is supposed to be a rather rather simple device that accompanies the Lit-Box for merchants and allows for payments with a quick scan-based payment through the Lit wallet. The idea is that this system will provide a very plug-and-play like solution to accepting cryptocurrency payments on the Lightning Network.
These concepts are mostly public domain, as the active developers have stated in various occasions that whilst some plan on developing the solutions (like Vertcoin), they welcome companies to turn these concepts into business endeavors.
Making the promise real
The approach Lit takes shows in what ways the Lightning Network could turn the merchants’ dream into reality. I have no doubt that more developers and businesses will follow and improve upon the current implementation and vision. As more coins join the Lit network, the network will become more resilient and more efficient. The more companies see the value of these ideas, the more they will focus on developing interesting PoS hardware. In the end, Lit can deliver the promise that Bitcoin made to merchants and help create a more sustainable cryptocurrency ecosystem.
Is the Merchant’s dream a mirage? was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.