Bitcoin has long been hailed for its decentralization and security with the scalability portion of the classic blockchain trilemma perhaps lagging the other two attributes as Bitcoin marches towards mass adoption.
The Bitcoin Lightning network was created to improve Bitcoin’s scalability by serving as a layer 2 payment protocol built on top of the Bitcoin blockchain that enables off-chain transactions. Lightning improves on Bitcoin’s scalability by settling transactions off-chain while still benefiting from Bitcoin’s inherent security and decentralization.
The Bitcoin blockchain can process around seven transactions per second, which can make it cumbersome for widespread use, but Lightning improves upon this and can process up to one million transactions per second, far exceeding the throughput of other blockchains or traditional payment networks like Visa and Mastercard. Lightning payments can be made by scanning a QR code, which facilitates both speed and ease of use. Lightning payments typically achieve finality in seconds or even milliseconds while drastically lowering fees, paving the way for use cases like micropayments.
The growth of the Lightning network and the ecosystem surrounding it has been nothing short of impressive. As of September 12, 2022, the funds committed to the Lightning network have grown approximately 96 percent year over year with the known network capacity reaching an all time high of 4,740 BTC (worth approximately $105 million at the time). We’ve also seen dozens of new apps, service providers, and SDKs being built to help make the Lightning network more accessible to users of all kinds.
BitGo is taking the next step in the evolution of Bitcoin scalability by introducing a new custodial Lightning service. Custodial Lightning allows BitGo customers to get up and running quickly and seamlessly integrate the Lightning network into their applications or services.
Using BitGo’s Custodial Lightning service comes with an array of benefits — it is fully custodial, so there’s no need to be always online to receive funds or worry about securing private keys. BitGo takes care of running the Lightning node and automatically maintains the liquidity of the payment channels connecting the node with the rest of the network. By removing the complexity of maintaining the infrastructure needed to interact with the Lightning network, BitGo makes it a simple, straightforward process for clients to leverage instant Bitcoin payments just as easily as any traditional payment processing system.
Custodial Lightning is built natively into the BitGo platform, so it works seamlessly with BitGo’s existing access and policy controls. The end result is that all of your Lightning payments can undergo the same approval process and controls as any other on-chain transaction. Right now, Custodial Lightning is API only; clients can call an API to make payments, generate invoices, and transfer funds back and forth from their on-chain balance and their Lightning balance.
Currently, the Custodial Lightning service is available in a limited number of jurisdictions and access to it is on an invite-only beta basis. If you’re interested in gaining access to Custodial Lightning, please fill out this form.
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BitGo is the digital asset infrastructure company, delivering custody, wallets, staking, trading, financing, and settlement services from regulated cold storage. Since our founding in 2013, we have been focused on accelerating the transition of the financial system to a digital asset economy. With a global presence and multiple regulated entities, BitGo serves thousands of institutions, including many of the industry's top brands, exchanges, and platforms, and millions of retail investors worldwide. For more information, visit www.bitgo.com.
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