Xapo Bank Becomes 1st Lender To Enable Near-Instant Bitcoin Payments
Xapo Bank announced that it has joined the Lightning Network and formed a partnership with Lightspark. This collaboration will make the organization the first private bank to accept Lightning payments with a full license.
according to a Press releaseXapo Bank users can now instantly pay for small purchases of up to $100 at any vendor that accepts Lightning payments, without incurring exorbitant transaction fees or long blockchain confirmation wait times.
Xapo Bank Bridges the Gap Using the Lightning Network
Xapo intends for the integration to bridge the gap between traditional finance and cryptocurrency. The platform currently offers a 4.1% annual interest rate in US Dollars on accounts with a deposit guarantee of $100,000, and will eventually offer up to 1% in Bitcoin.
Image: Medium
Seamus Rocca, CEO of Xapo Bank, said of the partnership:
“By integrating with the hyper-efficient Lightning Network, we are the first bank in the world to streamline this process and allow our members to pay for small purchases with Bitcoin without having to convert to USD first.”
How Lightning Works
The Lightning Network is a second layer scaling solution for Bitcoin and other cryptocurrencies. It was designed to solve Bitcoin’s scalability issues, which is limited in the number of transactions it can process per second. It allows for faster, cheaper and more private transactions than on-chain transactions.
Image: Blockgeeks
The Lightning Network is built on top of the Bitcoin blockchain and uses smart contracts to create payment channels between users. These payment channels allow users to transact without the need for each transaction to be recorded on the blockchain. Instead, only channel opening and closing transactions are recorded on the blockchain.
To use the Lightning Network, two users must open a payment channel between them by creating a multi-signature transaction on the blockchain. Once the channel is open, they can transact with each other by exchanging off-chain signed transactions. Each transaction updates the channel balances and the final balances are recorded on the blockchain when the channel is closed.
a complete bench
Xapo received a banking license, prime membership with Visa and Mastercard and SWIFT Membership since the beginning of the process in 2019. This means that the company can interact directly with correspondent banks, rather than going through payment companies or other parties, and has access to money market accounts.
Crypto total market cap at $998 billion on the weekend chart | Chart: TradingView.com
Rocca emphasized the importance of the newly formed collaboration in light of the regulatory pressures currently exerted on cryptocurrency exchanges, income generating products and stablecoins.
-Featured image from Coin Culture