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Within the next 6 months, users of digital asset exchange Kraken, will gain the ability to deposit and withdraw Bitcoin through use of the Lightning Network. Announcement of this pending support for the Lightning Network is a major step forward for the layer-2 protocol, which has been in development for years. It marks the first major exchange to officially adopt the protocol, and may just be the spark which ignites a race for others to do the same.
In order to realize this goal, Kraken indicates that it will be putting together a dedicated team to work on Lightning Network implementation.
“In 2021, we are committed to hiring a team to focus specifically on the Lightning Network, as part of our continuing effort to deliver the best possible experience for traders and investors…By joining Kraken’s Lightning Network team, you can shape the future of programmable payments with digital money.”
Since its inception, Bitcoin users have dreamt of a day in which they could use the digital asset as a true currency. This means not just HODLing, but buying and selling everyday items. Unfortunately, as it stands, Bitcoin suffers from scalability issues which prevent this dream from becoming a reality. Simply put, the network in its current form cannot handle a high quantity of users – resulting in congestion, high fees, and slow transaction times. While this does not limit Bitcoin from acting as a store of value, it does limit its use as a typical currency.
The Lightning Network, which has been development for years now, looks to change this. Acting as a second-layer protocol, the Lightning Network holds the potential to solve not only the scalability issues plaguing Bitcoin, but also imbue new levels of privacy, and nearly eliminate transactions fees. These feats are achieved through the use of off-chain payment channels, onion routing, and hashed time-locked contracts.
To learn more about how exactly the Lightning Network can achieve these feats, make sure to peruse our educational series HERE.
The entire cryptocurrency industry is a group of forward thinking trendsetters. However, even within this group, there are subsets which push the boundaries even further. Kraken would be one of these.
Going back a few years, there was a controversial upgrade made to the Bitcoin network – SegWit. While it has grown to become the norm since its release, not every platform utilizes SegWit even today. This could also become the case for Lightning Network.
The bottom line is that, while Krakens impending support for the Lightning Network is certainly promising, it will most likely be years before the second layer protocol becomes commonplace.
Bitcoin’s meteoric rise over the last year has largely been due to it being increasingly perceived as an asset uncorrelated to traditional markets. This combined with its inherent traits such as immutability and its inflation resistance, have resulted in the digital asset becoming a valid store of value.
This growth has been achieved without the Lightning Network and what it offers – speed, cost savings, and privacy. Once implemented, the lightning network provides the potential to transform Bitcoin from a store of value into a true hybrid which can act also as a usable currency. When this finally occurs, the future will be bright indeed for Bitcoin.
While some companies where handcuffed by operational restrictions in 2020 due to COVID-19, Kraken Exchange raced ahead full throttle. In addition to this announcement of Lightning Network implementation, the United States based exchange was recently successful in its bid to become a chartered bank through a new branch name ‘Kraken Financial’.
Founded in 2011, Kraken is headquartered in San Francisco. In the time since launch, the team at Kraken has developed and grown their platform into one of the world’s most popular cryptocurrency exchanges.
CEO, Jesse Powell, currently oversees company operations.