The Lightning Network and its Potential Impact on Retail Adoption of Cryptocurrencies
What is the Lightning Network?
After a transaction is made on the Bitcoin network, it isn’t until six blocks have been added to the network that the transaction is confirmed and secured from the possibility of reversibility or double spending. The Bitcoin network produces one block approximately every ten minutes to allow propagation and synchronization of network information among all peers. This means that it takes about one hour for the six blocks to be produced and a transaction to be considered secure on the Bitcoin network. Understandably, this delay makes the network not desirable for commerce transactions such as retail, where retailers and consumers expect instantaneous confirmation of their transactions. Both physical and digital commerce transactions depend on real-time confirmation and low transaction fees.
The Lightning Network was developed to solve this issue by creating a payment network channel separated from the actual blockchain. This side channel payment network enables both instantaneous transactions and micropayments, thereby eliminating the long wait time experienced with the main blockchain and reducing transaction costs. Once the payment channel is closed, the final transaction is then recorded on the main blockchain.
We’re seeing a growing usage of the Lightning Network since it came out of beta in March 2018, and see this as one of the reasons why more retailers will adopt micropayment transactions enabled by companies such as Casa, Lolli and many others. Recently, Lolli partnered with Safeway, a big U.S. retailer to reward shoppers with Bitcoin. Also, Walmart is exploring the use of a cryptocurrency with the filing of a stablecoin patent. Additional information on both recent developments in the retail sector are provided below.
Safeway - A Major U.S. Grocery Chain to Provide Rewards in Bitcoin
Safeway is giving back 3.5% of purchases to customers who shop online on the U.S. retailer’s website. Through a joint partnership with Lolli, customers can use the Lolli browser extension to shop online and earn Bitcoins. According to Lolli’s website, they have also signed up other major U.S. retail companies such as Macy’s, GAP, and Walmart. According to public usage statistics published by Google, the Lolli browser extension has over 19,000 users who have signed up so far.
Walmart Files Patent to Create its Own Digital Currency
A new patent filing suggests that retail giant Walmart may be developing its own U.S. dollar-backed digital currency similar to Facebook’s Libra cryptocurrency.
According to the USPTO office, the abstract of Walmart’s patent filing sounds quite similar to Facebook’s Libra cryptocurrency. Below is the abstract from the patent application:
A method includes: generating one digital currency unit by tying the one digital currency unit to a regular currency; storing information of the one digital currency unit into a block of a blockchain; buying or paying the one digital currency unit; determining whether restrictions are applied to the one digital currency unit by referring to one or more documents associated with the one digital currency;
If Walmart follows through with implementation and deployment of a stablecoin for use in its retail outlets and online, it will be the beginning of major retail and e-commerce giants launching their own coins and I expect others like Amazon, Alibaba to follow suit.
At BlockMint, we are encouraged by these recent developments in the retail sector which we see expanding the adoption and use of cryptocurrencies so that everyone will be able to participate in the crypto-economy.
Chief Executive Officer