Today, Fold announced the integration of Bitcoin's Lightning Network into their apps to help users use Bitcoin at Amazon, Starbucks, Uber and other large retailers. Unlike another cryptocurrency payment app released earlier this year, Fold insists on bitcoin-based users who are not exposed to issues related to traditional financial systems, such as KYC restrictions and mandatory registration.
The power of the lightning network
Early adopters of Bitcoin should remember that Fold was founded in 2014 and is one of the earliest startups based on the p2p digital cash system. At the time, the main function of the app was to save Starbucks coffee with Bitcoin by 20%. However, the company encountered problems a few years ago, the bitcoin network began to be congested, and the rise in transaction costs on the chain made Fold's function a rib.
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Fold CEO Will Reeves said:
“We quickly realized that layer-1 is not our ideal payment track. The long-term confirmation time, especially the high transaction cost of the chain, makes it not feasible in most consumer and retail situations. Because of these challenges We have been very active in adopting and building layer-2 solutions, such as Lightning Networks, and hope to keep Bitcoin payments running."
The Lightning Network is a secondary payment layer built on top of the Bitcoin network that allows users to trade directly without having to publish all transactions to the Bitcoin blockchain. This makes bitcoin payments faster, less expensive, and may enhance privacy.
As a bitcoin payment method, Lightning Network achieved steady growth in 2019. Earlier this year, an online retailer revealed that Lightning Networks has become a popular payment method and is more popular than other competing currencies they support. In addition, the public beta version of the unlicensed exchange based on the Lightning Network went live in April.
For Fold, Lightning Networks provides users with faster, lower-cost bitcoin payments while retaining the core spirit of the technology—decentralization.
Before adding the Lightning Network feature to the core app, Fold tested the new payment network with a pizza ordering service called Lightning Pizza.
“We launched Lightning Pizza to verify the assumption that if Bitcoin payments are as simple and rewarding as using a credit card, people will change their spending habits.”
“We were shocked by the results. An instant, simple, zero-cost payment method and good incentives can really help people form consumption habits. Lightning Pizza can sell thousands of pizzas every day, thousands of people. The repeat customers spent tens of thousands of dollars. Of course, there are a lot of user experience and technical problems to be solved, but I believe that the introduction of lightning network into Fold products will also get the same reverse, so that bitcoin payment is as simple as swiping a credit card. We will be very Introducing new features soon, making them widely accepted."
Lightning Network + Reward Drives Bitcoin Payment Development
As mentioned above, early Fold users knew that they could start playing Starbucks with this app for a 20% discount. Such discounts do not exist in the current Fold app, but the company plans to re-offer these discounts for retailers on the platform in the coming weeks.
Fold's rewards program is similar to the strategy of another bitcoin startup, Lolli, which focuses on improving the interaction between merchants and consumers. At the recent Bitcoin 2019 conference in San Francisco, Lolli CEO Alex Adelman announced the company's overall plan to use its user base to make bitcoin payments mainstream.
Obviously, the ultimate goal of bitcoin payments is to allow both merchants and consumers to use Bitcoin. Currently, Fold is equivalent to a gateway between Bitcoin holders and retailer gift card platforms and digital payment systems.
Today, like many other bitcoin startups, Fold also wants to help Bitcoin users create new tools based on Lightning Networks. In addition, the company plans to expand the size of its retailers on the platform in the near future.