The Bitcoin 2022 conference brought over 25,000 attendees to Miami last month to discuss the future of the world’s largest cryptocurrency. The event, which attendees have described as “extravagant” and compared to a bacchanal, featured a now-notorious keynote speech by Peter Thiel in which the venture capitalist rallied Bitcoin supporters against a list of people whom he described as Bitcoin’s enemies, including Warren Buffet and Jamie Dimon.
While Thiel’s speech grabbed a lion’s share of the attention surrounding the conference, many investors, developers, and founders in the Bitcoin community convened at the same event to discuss a threat that could prove far more pressing than the aforementioned personae non gratae – competition.
Even as the overall crypto market has plunged this week, Bitcoin remains the most valuable crypto asset in the world with a market capitalization of around $589 billion as of May 9. Its status stems, in part, from the advantage of having been the first cryptocurrency token on a public blockchain.
But as new blockchains continue to spring up, and after last year’s “DeFi” summer that brought new traction to Ethereum, Bitcoin investors have had to start watching their backs. Now, the blockchain’s backers are pouring capital into efforts to ensure it can maintain its dominance as a form of money and expand into other use cases through decentralized apps (dapps) to keep up with competitors like Ethereum and Solana.
Bitcoin’s payments edge
Bitcoin’s edge has typically been described as its value as an asset to hedge against inflation, much like gold, because of its fixed supply. Bitcoin supporters, including Thiel, ARK Invest’s Cathie Wood, and MicroStrategy’s Michael Saylor, all spoke at Bitcoin 2022 about its ability to act as a store of value when central banks relax their policies and let inflation run hot, as has been the case in the United States throughout the majority of the COVID-19 pandemic.
The reality has not been so simple, as Bitcoin has oftentimes traded down amid periods of rising inflation in the U.S. But Bitcoiners argue that its value is more clearly visible in developing nations, especially those experiencing hyperinflation or with sizable proportions of underbanked individuals. They view it as a relatively safe asset that can enable faster, more efficient payments both within and across borders.
The Bitcoin network itself only supports about five transactions per second, according to crypto exchange Binance. Bitcoin has integrated with a layer-two protocol called the Lightning Network to increase its speed and efficiency while lowering transaction costs, a piece of infrastructure used by the nation of El Salvador and major crypto exchanges such as Kraken.
Startup Lightning Labs, which raised a $70 million Series B round last month, is at the forefront of developing Bitcoin’s Lightning Network. It is building infrastructure for the Bitcoin Lightning Network akin to Visa’s payments network, Lightning Labs CEO and co-founder Elizabeth Stark told TechCrunch.
The Lightning Network can execute hundreds of thousands of transactions per second by settling transactions off-chain in a separate ledger, thus freeing up space on the layer one Bitcoin blockchain while still adhering to its underlying protocol, Stark explained.
“People want access to Bitcoin, the asset … When you’re looking at stability, security and the global payments use case, and the global transaction aspects, that’s where Bitcoin and the Lightning Network will shine,” Stark said.
Lighting Labs recently announced a proposal to build Taro, a protocol that would allow individuals without bank accounts to send and receive money in the form of stablecoins that represent their domestic fiat currency through mobile applications.
“If I were Visa, I’d be scared, because there are a lot of people out there that have mobile phones, but now don’t need to tap into the traditional system, and then the merchants don’t need to pay the 3% fee plus 30 cents [for a transaction]. You can have fees that are dramatically lower than the legacy system,” Stark told TechCrunch.
Startup Moon, in fact, partners with Visa to enable users to buy goods and services with Bitcoin through the Lightning Network at any U.S.-based e-commerce site using Visa’s rails.
While Lightning Labs is focused on optimizing global payments through the Lighting Network, trading platform Robinhood has found the network useful in keeping network fees low on its new crypto offering, which it rolled out to users last month, Robinhood’s crypto CTO, Johan Kerbrat, told TechCrunch.
“We will support Lightning on the [Robinhood] app, so you will be able to connect it to pay merchants directly with the Lightning Network,” Kerbrat said. “It also means that you will be able to kind of create a channel between people using Robinhood outside of Robinhood and be able to exchange Bitcoin for almost zero fees.”
