Bitcoin's Lightning Network (LN), a second-layer solution that recently surpased the 650 BTC capacity and saw game developers power chess through it, might only be just a few seconds slower than traditional centralized digital payment platforms like Apple Pay.
This, according to research conducted by JP Thor, a bitcoin (BTC) analyst and advocate. Notably, Thor’s latest study and comparison of crypto and conventional, or mainstream, payment methods came in response to a challenge issued by Anthony Pompliano. Also known as “Pomp” on social media, the Morgan Creek Digital Assets co-founder had requested that “someone should run a test to time” how long it takes to process a credit card and then a LN-enabled crypto transaction.
Commenting on how “fast” the LN is, Pompliano said he “wouldn’t be surprised if transactions go from [crypto] wallet to wallet [on the LN] faster than the time it takes for a credit card machine to process the chip on a card that gets inserted.”
The Lightning Network is so fast.— Pomp 🌪 (@APompliano) February 5, 2019
I wouldn’t be surprised if transactions go from wallet to wallet faster than the time it takes for a credit card machine to process the chip on a card that gets inserted.
Someone should run a test to time it and record the whole thing on video.
Thor Takes On Pompliano's Challenge
Accepting Pompliano's challenge, Thor compared the amount of time it would take to onboard a new customer account to a traditional mobile payment platform with how long it would take to do transfers using a Lightning Network-enabled crypto wallet. Although it was not as straightforward as Pompliano implied, the LN-based transactions were actually much faster as no third-parties are required to complete the transfers on the layer-two payment gateway.
Explaining how the transaction is processed, Thor mentions:
Sending a payment across the LN will always be faster than Visa. LN payments can be processed as fast as a TCP/IP connection between two peers. A single channel has been shown to process over 250 TPS, so the network can scale to no real upper bound.
In terms of simply settling a payment, however, Apple Pay is currently just a “couple of seconds” faster than the LN in real-world scenarios. In order to take this into account (when comparing the two), Thor decided to include the onboarding process of both merchants and customers. According to Thor’s research, traditional payment processors are still able to better serve customers, but the LN appears to have the upper hand when serving merchants as it’s easier and faster to set up on their end.
"Wallet of Satoshi" Almost As Fast Traditional Digital Payments
Thor’s comparison test began by using an Australia-based Mastercard debit card with Apple Pay. Using this setup reportedly allowed him to complete the transaction process, which involved account registration and receiving payment, in less than five minutes. Included in the five minute timeframe was downloading the Apple Pay app and finishing the know-your-customer (KYC) process, Thor revealed.
Additionally, Thor sent money from a regular bank account, and claims he was able to receive the funds in his Up app account in about 1 minute.
When using the LN-enabled “Wallet of Satoshi” crypto custodial wallet, Thor was reportedly able to achieve the same results in approximately the same timeframe of five minutes.
We've just ticked over to 10,000 Lightning payments in total! Some interesting stats: the average transaction fee was 0.35 satoshis, or about $0.000018, and more than 8,000 of those transactions had 0 fees. Here's to 1 million payments! Watch the count at https://t.co/wkgczIe7og pic.twitter.com/346oY55kmO— ⚡ Wallet of Satoshi (@walletofsatoshi) January 14, 2019
Notably, Wallet of Satoshi (WoS) accounts also require users to complete KYC, but only when purchasing fiat currencies. Validation, or approval of KYC, on WoS occurs almost instantly, Thor noted.