The Lightning Network’s biggest selling point is its ability to dramatically improve UX (user experience), especially with cryptocurrency related services. An overlooked example would be transaction anxiety. Transaction anxiety is that feeling you get when you’re waiting for a transaction to confirm after paying a hefty transaction fee. In no time at all, you’re compulsively double-checking the deposit address to ensure it is the right one, and you’re sitting there in a pool of your own sweat worried-sick whether your transaction will ever get confirmed after you paid a substantial transaction fee.
Lightning gets rid of that anxiety by virtually making the experience of transferring value closer to using Snapchat than to using your traditional bank or broker because it’s:
- Instant. Transactions are instant.
- Fractional and cheap. Fractions of a satoshi can be sent with minimal fees.
- Open. Anyone can use it. No walled gardens here.
With good UX, these advantages can be used to allow users to instantly send and receive Bitcoin without even knowing Lightning is being used underneath. For example, Bottlepay in the UK, Strike in the US and Lastbit in the EU allow anyone to use Lightning from their GBP, USD or EUR bank accounts and make sending payments as easy as scanning a QR code with 0 knowledge of the underlying tech, thus eliminating anxiety for crypto newcomers.
Nobody experiences transaction anxiety more than traders. For a trader, if you’re moving funds to and from different exchanges, saving percentage points on time and fees can not only feel good, it can also make the difference. In traditional markets it’s not uncommon for traders to pay millions to co-locate their machine as close as possible to the exchanges’ server to get the lowest amount of latency physically possible as it can result in nano-second advantages over their competitors. The lightning network is the first step in that direction.
For amateur and professional traders, having the fastest settlement times not only removes transaction anxiety, it results in a situation that allows them to move between trading venues instantly, whilst still retaining ownership of their funds that are not locked in open positions. Right now, the Lightning Network is the fastest way to settle, with no lower bound and all manner of existing exchanges and brokerages are taking notice by bolting Lightning onto their existing settlement infrastructure (Kraken, OKCoin, Bitfinex, River and Paxful).
Aside from removing transaction anxiety for all types of users, we believe the next big jump forward in UX comes from the previously-impossible unique features the Lightning Network provides. For us at Kollider, we believe the Lightning Network enables frictionless access to markets for everyone. Today we use the Lightning Network to improve UX for traders and enable experiences that have not been previously possible.
Experiences such as giving traders the option to instantly top up their margin requirement on open positions directly from their own non-custodial wallet balance to avoid liquidation. This is a feature that should have been around in March 2020 and could have prevented numerous traders from getting liquidated during volatile price swings.
We even see a future where with this sort of speed and a sprinkle of magic from Discreet Log Contracts(DLCs), Lightning has the potential to enable a world where Bitcoin and synthetic assets are issued, traded and settled in real-time on top of the Lightning Network (just ask Suredbits or Atomic Finance). But regardless of what the future holds, when in good hands, the Lightning Network stands to dramatically lower the barriers to access financial products and applications using the most secure and liquid cryptocurrency, Bitcoin.
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