Bitcoin, Pizza, and the Lightning Network
To better understand Bitcoin’s Lightning Network — which enables people to send small amounts of bitcoin instantly with basically no fee — we at Circle did what any hungry group of people would do: Ordered pizza. Lots of pizza in fact.
The Lightning Network was launched in January 2018 and has grown exponentially. It’s a so-called “layer 2 solution” because it’s built on top of an existing layer, in this case Bitcoin. Since its launch there have been a host of Lightning applications (“Lapps”) that have allowed many to experiment with Bitcoin’s second layer for the first time:
- Tippin.me lets people send small bitcoin payments via links commonly shared on Twitter.
- Satoshi’s Place lets people pay by the pixel to make their mark on a communal piece of online artwork.
- Pollofeed even lets you use bitcoin to feed chickens in some remote location.
And finally, we found an application that allows people to order pizza. Our goal was to use something as simple as ordering pizza to demonstrate the power of what the next evolution of crypto and blockchain technologies can bring. Here’s how it went.
How lightning first strikes
Where more advanced users opt to connect to the Lightning Network by running their own node (CasaNode is a popular option), a simple way to experiment with Lightning is by downloading an app called BlueWallet. Bluewallet runs its own Lightning node that custodies user funds so they can send and receive Lightning transactions.
Bluewallet contains a standard bitcoin wallet and a lightning wallet. To get started, you first need to get some bitcoin into the app’s bitcoin wallet. This means sending bitcoin from an external wallet and waiting for the transaction to confirm.
Once you have some BTC loaded onto the wallet, another step is needed to open your lightning wallet and lock some bitcoin into it.
Sending BTC from an external wallet and sending another transaction to lock BTC into the lightning wallet took about half an hour — a reminder of why Lightning is needed in order to make bitcoin useable for smaller day-to-day transactions in the first place.
Need pizza sats, stat
When we decided to have a Lightning pizza party, a few of us had already been experimenting with BlueWallet and Lapps like Tippin.me and Pollofeed. The problem was that not any one of us had enough bitcoin locked into the Lightning network to cover the entire order. We decided the best course of action was to pool our money with Ben, our Institutional Marketing Lead, and have him place the order.
The smallest unit of account in bitcoin is called a satoshi, or sat for short. 1 satoshi equals = 0.00000001 ฿. This means you can send Lightning payments worth a fraction of a penny, making it ideal for microtransactions.
To get started, Ben created a Lightning invoice for myself, Lead Circle Research analyst Ria and Nick from Circle Trade, based on how many satoshis each of us could spare.
Next, each of us scanned the invoice barcode on Ben’s phone using our smartphone camera. Once scanned, the Lightning Network kicks into action and the valued is transferred instantaneously.
Lightning fast delivery
ln.Pizza was created by Fold, which is a company that lets users spend cryptocurrency at places like Starbucks, Whole Foods, Dunkin Donuts, Target and Uber. They recently launched a web-based Domino’s portal that lets you order pizza at a discount over the Lightning Network as a fun way to illustrate the Lightning Network’s functionality and as a proof-of-concept for a larger service to be released at a later date.
Basically, you place an order through their portal and pay over the Lightning Network. Fold then pays Domino’s in fiat on your behalf.
After finding the nearest Dominos, we ordered 7 cheese pizzas, cheesy bread and some garlic knots. All in with tax and tip, the order came to 17,43,602 satoshis, or $68.52.
Once we confirmed our order, Ben was presented with another Lightning invoice barcode, scanned it and the payment was issued over the Lightning Network.
About a half hour later — voila!
Something to chew on
A pessimistic take on all of this is that it isn’t really that cool. We used a custodial wallet (meaning we had to trust Bluewallet with our Lightning funds), we only paid Fold in bitcoin that in turn paid Domino’s in fiat, and we did it all for Twitter likes.
An optimist on the other hand might point to this entire experiment as a display of the power of open source technology. Ten years ago someone submitted a white paper to an internet forum that evolved into an internet based currency valued in the billions of dollars. Others saw that technological limits of that currency would restrict its use in day-to-day transactions and built a second network to make it suitable for smaller payments. Then some employees from a company that evolved out of this technology used applications built by others to order some pizza, and that’s pretty cool.
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