Lightning na na na na na na na na na na

I wrote in my 2020 theses “it’s tough not to be disappointed with the Lightning Network’s lack of growth in 2019.” Still, I doubled down on my previous prediction that the network might blow up and have its “irrational exuberance” moment in the new year. The Lightning community has indeed been off to a hot start in 2020.

[Learn more about Lightning on Messari here or read BitMEX Research’s epic SEVEN PART series (most recent here).]

Today, the development team at Lightning Labs, announced a $10 million Series A round from Craft Ventures, Ribbit Capital, RRE Ventures, Slow Ventures and others. They also announced their first financial product “Lightning Loop”, a non-custodial service that simplifies the process of moving funds between the Lightning Network and the bitcoin blockchain by fixing the network’s "channel capacity” problems. Sounds complicated, but you can think about this like an automated load balancer that optimizes the amount of working capital participants need to commit to the Lightning Network to ensure their transactions clear properly. It’s a big deal, and is already working for a number of startup lightning payment providers.

The Lightning Labs news comes on the heels of another pretty massive product release last week from Zap, a wallet provider that revealed its new “Strike” mobile app, which connects user bank accounts and credit cards to the Lightning Network. The app makes it possible for users to settle Lightning invoices without requiring them to ever really understand they are using bitcoin. This could be big for merchants in high-risk industries like cannabis and adult entertainment as it would allow them to promote bitcoin payments without creating an onboarding hassle for customers. That's the sort of UX upgrade (that remove tax headaches, volatility issues, consumer education hurdles) crypto needs more of. It’s powerful shit.

All this comes just two weeks after Square Crypto unveiled a new lightning development kit, which gives wallet and app developers a low-friction method to integrate Lightning and create custom applications. Square could help add lightning capabilities to existing bitcoin wallets without creating a separate UX, supports multi-device access to wallets, and allow developers to make their own UX, security, and privacy tradeoffs.

With all three of these recent developments, simplicity and flexibility is the name of the game.

It feels like Lightning is about to have its moment, during a year when Bitcoin already has a decent number of macro and structural tailwinds.

-TBI