CoinGate, a bitcoin payment processor, has launched bitcoin Lightning Network payments on its platform, bringing the option to accept Lightning payments to its 4,000 clients.
The Lithuanian company enables merchants to accept bitcoin payments for their products or services. Merchants can keep the funds in bitcoin or CoinGate will convert those funds to Euros or U.S. dollars for customers who want to avoid dealing with bitcoin’s volatility.
In a blog post announcing the launch of Lightning on its mainnet, CoinGate explained that shoppers can pay their affiliated merchants with Bitcoin's on-chain transactions (a conventional way) or select the option to pay through the Lightning Network, a second-layer solution that works on top of Bitcoin.
Lightning “fits exactly in our vision of what Bitcoin should be in the future,” Dmitrijus Borisenka, CoinGate CEO and co-founder, said in a statement. Still, the network is “in its early days and more suited to advanced users and Bitcoin enthusiasts,” the company notes.
Hailed as the solution to Bitcoin’s scalability problem, Lightning promises faster transactions and lower fees. Bitcoin can only handle seven transactions per second. Transactions on the Bitcoin blockchain take a minimum of 10 minutes to confirm and high fees make small purchases, like coffee, too costly to make sense.
Lightning works via a network of payment channels. As channels open up, different channels get linked together. This allows Bitcoin users to send payments through a far-reaching network. Because the transactions happen on top of the Bitcoin blockchain, they are not subject to normal wait times. Instead, Lightning only settles the final balance on the Bitcoin blockchain once a channel is closed.
CoinGate has been piloting a Lightning Network integration developed by Lightning Labs with a group of 100 merchants since July 1, 2018. The pilot received “overwhelmingly positive feedback” CoinGate wrote in its blog post.
The Lightning Network was the brainchild of researchers Tadge Dryja and Joseph Poon, who first proposed the idea in a 2015 white paper. The goal of the network is to make bitcoin more useful for everyday purchases and micropayments.
It could be some time before the Lightning Network is widely adopted, but CoinGate is a step in that direction and a big win for Bitcoin supporters.
Find out more about the Lightning Network here.