Twitter co-founder Jack Dorsey pressed Coinbase CEO Brian Armstrong on Wednesday over his alleged refusal to acknowledge the power of Bitcoin’s lightning network – a layer-2 scaling solution designed to make BTC easier to spend.
His question sparked an online debate about the benefits and limitations of lightning in the payments realm, compared to other cryptocurrencies such as stablecoins.
Why Not Bitcoin?
In a tweet on Wednesday, Armstrong claimed that crypto’s next step was to make payments “instant and free globally,” through collective work on layer 2 solutions and user onboarding. He referenced a coffee shop that now accepted gas-free USDC payments using Coinbase Wallet, which integrated messaging this month.
The CEO acknowledged that crypto was still “stuck on layer 1,” prompting Dorsey to question him about Bitcoin’s premiere layer 2 network. “Why do you continue to ignore bitcoin and lightning?” he asked.
Why do you continue to ignore bitcoin and lightning?
what “crypto” is a better money transmission protocol and why?
— jack (@jack) July 26, 2023
Lightning makes BTC payments instant and virtually free by taking transaction settlement off the network’s main blockchain. The latter can get bloated and slow in times of peak demand, as seen when an explosion of Bitcoin-based memecoins in May sent transaction fees above $30 apiece.
The event caused withdrawal delays at Binance, which has since decided to integrate Bitcoin’s lightning network as a solution for future base-layer fee spikes. However, despite common demand from Bitcoiners including MicroStrategy’s Michael Saylor, Coinbase is yet to do the same.
While Armstrong didn’t respond to Dorsey directly, Solana Labs co-founder Anatoly Yakovenko answered his question. “USDC on Solana is cheaper and faster than Bitcoin and lightning and it’s the currency that people want to use globally,” he said.
USDC is a stablecoin value-pegged to the U.S. dollar, allowing it to avoid the short-term volatility of other cryptos, and better serve as a medium of exchange. The world’s most popular stablecoins including USDT and USDC primarily circulate on networks like Ethereum and Solana, but not Bitcoin.
Dorsey has previously disregarded both Ethereum and Solana for being centrally controlled and prone to corporate capture.
Spiral – a subsidiary of Dorsey’s payments company, Block – has created tools to help developers better integrate the lightning network into their apps. The company’s popular payment service, CashApp, has also integrated lightning.
Solutions for Bitcoin
The adoption of Bitcoin’s lightning network continues to grow over time, as do the network’s capabilities. Last year, Bitcoin infrastructure company Galoy developed “Stablesats” – a centralized solution for effectively transacting “dollars” over lightning using perpetual futures trades on the back end.
Stablesats is here already, active, used by tens of thousands of people, not just a theoretical idea on paper.
It’s in production. People are transacting Dollars over Lightning, now! https://t.co/birkdZY5p3
— El Flaco 🌋 🇸🇻 ⚡☣️ (@_pretyflaco) July 26, 2023
Another company, Stably, launched Bitcoin’s first-ever base-layer stablecoin back in May, leveraging the newly popularized BRC-20 token standard. However, BRC-20’s creator has admitted that tokenization solutions for Bitcoin are best found with Taro – a company allowing for alternative asset transfers over the lightning network.
The company behind Taro, Lightning Labs, unveiled a toolkit earlier this month allowing AI to interact with Bitcoin’s lightning network.
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