There is an opportunity for traditional banking to improve the efficiency of their payments services, in terms of
- energy usage,
- speed,
- cost and
- simplicity of operation.
How?
For some inspiration, look up what those two startups are doing:
- Strike https://strike.me/ (operational in USA, Argentina and Salvador)
- Galoy https://galoy.io/ (operational in Salvador through the Bitcoin Beach wallet)
Both use the Lightning network as a payment rail to transmit US dollars instantly and at near-zero cost. Vendors charge in US dollars and receive US dollars although the payment goes over Lightning.
no credit card fees, even for very small amounts.
the transaction is cash final, i.e. settled immediately. There is no risk of chargeback.
Though Lightning is very new and still being improved, this is a significant infrastructure simplification when compared to the legacy banking network which contains a complex mix of SWIFT messages, correspondent banks, clearing houses and credit card companies.
References:
Hilarious and eye-opening King's Gambit talk by Jack Mallers from Strike about how the legacy credit card payment system works. The way he makes Lightning network benefits obvious is compelling.
Strike payments demo: Jack Mallers walks into a store and shows how he pays in 3 different ways from his phone. In each situation the payment goes over the Bitcoin/Lightning infrastructure and is received by the merchant in USD.
Galoy stablesats. The Bitcoin Beach wallet allows people to manage two accounts: a "savings" account in BTC and a "checking" account in USD for day-to-day expenses and protect from BTC volatility. Bitcoin Beach Wallet in the iPhone app store so you can just download it and try it out.
Michel Khazzaka's paper compares energy efficiency between traditional monetary system and Lightning. This is the first study that attempts to estimate the global energy consumption of the existing banking payment network. Check out his talk about payment efficiency at Adopting Bitcoin 2022.
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