Why we invested in Lightning Labs
Craft’s support of Lightning Labs is an expression of three things: our belief in bitcoin, the Lightning Network, and the Lightning Labs team.
Bitcoin is resilient, inexorable, and naturally viral. The first bitcoin block was mined in early 2009. Since then, it has endured 11 years of relentless scrutiny and attempted hacks. Bitcoin is default digital and default global, standing in stark contrast to the antiquated systems powering most of today’s money flows. As it grows, it will increasingly serve as an important check on politically-motivated monetary policy. Bitcoin’s security and incentive model may go down as the technical breakthrough of the century. And we are just at the beginning.
2. The Lighting Network (LN)
We believe the Lightning Network is the way to scale bitcoin. During the bull run in late 2017, bitcoin’s limitations were revealed. Slow confirmations and high fees sent critics into a frenzy. The issue was so pronounced that it caused a schism in the bitcoin community: scale in layers or scale with bigger blocks. The Lightning Network is the layered scaling solution. LN is designed to improve speed and reduce fees on the bitcoin network by load balancing traffic across layers. And it’s working. In the last year, the network has exploded with thousands of nodes transmitting millions of dollars worth of BTC. We’ve also seen the emergence of the Lightning startup ecosystem: dozens of companies have built lightning support into their businesses and thousands of developers are helping advance the protocol.
3. Lightning Labs
Elizabeth Stark and Olaoluwa Osuntokun (aka Laolu or Roasbeef) are two special entrepreneurs. They are prodigious in team building, community building and developing bleeding-edge technology. They have attracted some of the brightest and determined minds to contribute to the Lightning Network either by joining the Lightning Labs team, contributing to LND (Lightning Network Daemon) or other Lightning protocols, and building apps on the Lightning Network (aka “Lapps”). Elizabeth and Laolu are steady and committed stewards of the positive, collaborative and mission-driven ethos of the lightning community. If you haven’t been to a lightning event, I suggest you do so. As everyone who attended TLC in Berlin would attest, there’s something uniquely energizing about this group.
Elizabeth and Laolu are also savvy business leaders. The introduction of Loop demonstrates their ability to wrap a business model around their open source protocol — something many had a hard time wrapping their heads around. Loop is a product the Lightning community needs: businesses building on Lightning will gladly pay a fee for the convenience of Loop because it saves them time and money. There’s a natural network effect to Loop that will grow exponentially with the growth of the Lightning Network. Alex Bosworth, one of LL’s many great talents, explains it well here. Loop is just one of many value-add services Lightning Labs will provide the community, continuously lowering the barrier to bitcoin adoption.
Bitcoin is on its way to becoming a global, non-fiat currency. Like the internet, bitcoin will have a massive impact on the world. Governments will be forced to rethink monetary policy, businesses will need to reconstruct revenue models, politicians will be held more accountable, and people will gain a better appreciation for time preference. To get there, bitcoin needs to scale. We are excited to support the Lightning Labs team as they pioneer the development of this critical infrastructure and usher in the next chapter of bitcoin.