Enterprise adoption of Lightning Network is vital for its growth and resilience

Konstantin Richter
Oct 29 · 4 min read

We at Blockdaemon are ecstatic about the potential of Lightning to ease the burden of on-chain transactions for Bitcoin and think the time is right for the first stage of enterprise tooling for Lightning.

We presented our current Lightning offering at the first Lightning conference in Berlin and received some great feedback. Overall, the dawn of enterprise adoption was noticeable across many of the talks at the conference (most notably from James Lopp, Casa CTO).

When we say enterprise, it is important to note that the type of enterprise needing access to Lightning will change over time based on overall adoption. With enterprise during the first stage, we mean professionals, mostly exchanges, and payment providers.

We believe that the benefits of Lightning will incentivize exchanges specifically to adopt Lightning — much lower fees and instant withdrawals make Lightning transaction much more efficient than on-chain transactions. As exchanges account for nearly 50% of all Bitcoin transactions, there are enormous benefits for individual exchanges as well as Bitcoin overall in using Lightning. Fee savings would be in the billions this year alone, and Bitcoin block size would nearly half. In addition, privacy would be improved since not every transaction would be on-chain.

What would that mean for the Lightning network, and how can we get the network in a state where exchanges will become more serious in using Lightning?

From the Lightning network perspective, it is important to understand that larger hubs don’t necessarily lead to more centralization — the architecture of the Lightning network is that net flow of money is near zero, which means fees are low and makes running hubs barely profitable over time. In combination with the zero barrier to entry, there will always be a ton of new hubs circulating in and out.

Thus, if Lightning is good for exchanges, why are exchanges good for Lightning? Liquidity — channel life-cycle needs to increase toward an infinite amount of transactions, and exchanges will make that possible. The largest current adoption bottle-neck would finally be resolved.

Why do these exchanges need to participate in the Lightning network? They need all the things that we currently provide to exchanges for our other nodes:

  1. 99.99% uptime and multiple nodes to ensure redundancy no matter what.
  2. Security (SOC2 compliance) and HSM for hot keys and more for hot keys.
  3. Adding and deleting nodes as needed and load-balancing.
  4. Data — ability to query the node in any which way.
  5. Much better tools to manage liquidity (i.e never ever having to think about rebalancing channel).

We are nearly ready to offer all of the above. Our current commitment to Lightning is visible by us running a high-performing hub:

You can see our routing performance here and use it here:

We also offer a platform-dedicated Bitcoin node for $149 per month (the first product of its kind):

  • Choice of cloud and geo.
  • The LND daemon auto-installed.
  • The RTL Dashboard for Lightning administration.
  • Platform standard monitoring to ensure high uptime.
  • API Access to your node — NO LIMITS.

In addition, we are adding these features to offer exchanges and enterprises exactly what they need:

  • Rich monitoring UI with detailed data about node health & performance
  • Launch on-prem or in your own cloud easily with BPM — Blockchain Package Management
  • More control over configuration and optional add-ins via the Blockdaemon marketplace — e.g. btcpay server as optional add-on
  • Other admin dashboards & add-on tools

Stay tuned for our latest Lightning implementation and look out for our Marketplace launch that will offer other third party solutions also.

Blockdaemon Services: Blockdaemon runs nodes for professional entities, securely, performant and efficiently across its ground middleware platform used by 100s of customers and 50+ institutions.

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