While still relatively new, the Bitcoin Lightning Network technology offers distinct advantages for a wide range of business operations.
This is the opinion of Matt Maria’s editorial, CPA focused on how changes in accounting regulations will affect the Bitcoin community.
Today, companies spend vast sums of money on credit card fees when processing customer payments, ultimately reducing margins which is widely scrutinized by investors and management alike.
But the Lightning Network offers a new payment solution with the ability to process instant payments (using Bitcoin) with virtually no fees. It features decentralized collateral equivalent to the Bitcoin network, and ultimately uses the blockchain of Bitcoin, which has not been hacked since its inception in 2009. While skepticism among the general public about Bitcoin manifests itself in the volatility of asset prices, this innovative technology built on top of “Bitcoin bars” Provides a unique opportunity for executives and financial managers to improve profitability.
In fact, you can be anti-bitcoin and still be able to extract the benefits of the Lightning Network into your company’s payment processes, avoiding the problems of bitcoin price volatility.
Here are some of the top benefits of Lightning Network adoption for businesses:
Improve margins and reduce fees
with Mass layoffs By trading the market, investors and managers constantly scrutinize spreads – every dollar counts and can spell disaster without proper planning and foresight.
The Lightning Network helps relieve these stresses with minimal transaction fees. On average, payments made by credit card amount to About 3% in fees Due to intermediary financial institutions. The Lightning Network opens up the possibility Process payments at a fraction of the cost using micropayment channels. While it’s unlikely that an entire customer base will transact immediately through the Lightning Network, converting 25% of credit card payments could significantly improve margins.
Benefit from continuous innovation
Without going into superfluous detail of how Lightning works behind the scenes, the innovations being made in space remain iterative.
For example, Ibex Bay It operates as a web application service that allows merchants to generate an invoice on demand, generate a QR code to be scanned by a buyer using any Lightning wallet and process a Lightning payment instantly. Merchants can choose to receive payments based on a user-specified ratio of BTC to USD.
For businesses with point-of-sale (PoS) terminals, Strike is advancing Lightning Network compatibility for many of those businesses while offering benefits comparable to the IBEX Pay platform in terms of efficiency and cost-effectiveness. Most of these services do not require a monthly subscription fee.
Instant settlement
Another benefit of using the Lightning Network is near-instant settlement of funds. Companies are no longer required to wait 2-3 business days for clearing house / EFT settlement payments to access capital via “mandatory rails”. Intermediaries are removed using the Lightning Network, allowing for quick access to capital while limiting counterparty risk.
Integrated client base
Although customer bases are highly dependent on the goods or services offered by the company, there are a large number of Bitcoin proponents who prefer and often seek vendors who operate directly or indirectly in the Bitcoin environment.
Many Bitcoin advocates use websites such as btcmap.org And satmap. app To find companies that accept bitcoin. Given that the Lightning Network is a layer built on top of the Bitcoin Network, adopting it can provide you with an ever-growing built-in customer base that is eager to contribute and share the successes of businesses operating under the Bitcoin umbrella.
Limitations and risks
However, the relative infancy of the Lightning Network means there are potential limitations and risks.
For example, IBEX Pay It is currently offering a maximum transaction size of $2,500. Additionally, as with any new technology, while the network is gaining traction, there are still potential risks of bugs and other vulnerabilities. The recent pull in popularity has helped reduce concerns about this proof-of-concept, but without decades of data points to rely on, there are no warranty issues that won’t arise. Finally, the current lack of regulatory clarity in the digital asset space may lead to more questions later.
With all that said, the Lightning Network provides businesses with a competitive advantage financially, operationally and technologically, although there are some concerns due to the relative infancy of the product as well as the limitations in existing solutions. However, rather than stand by and suffer from the incoming margin pressures that continue to creep into the economy, it is worth taking action and adapting.
My recommendation to overseas business owners is to trial run the implementation of this solution for at least a small segment of your business and build a sufficient sample size to compare with existing payment processes. What is the worst case scenario here? You do not reap the benefits described here, but you do not receive collateral damage to your work. The best? You are the first mover in technology aimed at interrupting the payment processing space, along with increasing margins and gaining faster access to customer payments.
Decision is yours.
This is a guest post by Matt Maria. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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