The Future of Digital Payments

by Titusz Pan

Bitcoin is the first global and decentralized digital crypto currency. It is also the most well known and most widely adopted cryptocurrency with the highest market capitalization (~ $120 Billion as of November 2017) in this new asset class. The high security and the decentralized nature of the Bitcoin blockchain comes at the cost of high transaction fees. This raises an important question for the content community: “Will it ever be possible to use Bitcoin for content micropayments?”

There are different approaches within the community that try to solve this scaling problem. The most promising one is called “Lightning Network”. It circumvents the issue of the limited blockchain data storage capacity by summarizing many small transactions between participants into a lesser number of final settlement transactions. Only the final settlement transactions will have to be stored on the blockchain itself.

The Lightning Network technology is already available, it just hasn’t reached significant public attention and use-levels yet because the more polished end user tools are still in development. A nice and recent micropayment example where you can publish and buy content with Lightning Network based Bitcoin transactions is available at https://yalls.org/. This early example shows that Bitcoin is capable of making micropayment transactions cheaper than traditional payment systems.

“Lightning Network” might very well turn out as the ideal solution for a cryptocurrency focused blockchain like Bitcoin. But it will not help with the scalability for other use cases that often require tamperproof on-chain storage of metadata.

So there is still room and a need for alternative ecosystem specific blockchain solutions. And with the promise of cross chain atomic transactions it is even conceivable that cryptocurrencies will move seamlessly between different blockchains in the not so distant future.

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