Hodl Hodl, a decentralized peer-to-peer crypto exchange, is allowing users to buy, sell and receive bitcoin directly from their Lightning wallets.
Hodl Hodl announced the functionality on June 5, 2019. As this is a mainnet launch, users are now able to simply change their exchange mode to “Lightning” and Hodl Hodl will hold onto payment assets between buyers and sellers until contracts are completed, to protect users from scams. This is a special offering for Lightning Network transactions, and bitcoin trades will still be completely noncustodial.
In development since 2018, the Lightning Network may have the potential to revolutionize the world of cryptocurrency. Because it allows users to send payments and micropayments through direct channels between nodes run by those users, it can alleviate some of the scaling problems that Bitcoin faces, wherein transaction times and fees have the potential to increase at an astronomical rate.
Though not completely unheard of, Hodl Hodl’s direct integration of Lightning wallet functionality is rare among the industry’s various crypto exchanges. In January, Bitrefill also began using a similar functionality and Sparkswap launched in April with the selling point of enabling atomic swaps powered by the Lightning Network. The noncustodial nature of the Lightning Network has allowed Sparkswap to let users directly trade their locked assets and then unlock them simultaneously once both parties have verified that the transaction is legitimate.
Hodl Hodl’s announcement noted that this update is intended to offer only basic functionality for the mainnet integration of Lightning wallets with as few bugs as possible. The exchange’s developers plan further refinements for this protocol in the coming weeks.