Gibraltar is solidifying itself as a bitcoin hub. The overseas British territory was one of the first to introduce bitcoin and crypto-friendly regulation, resulting in several large digital payments companies acquiring a local license, including FTX, Huobi and Bullish.
More recently, a video of Joe Hall gained traction on Twitter. In the video, he compares the speed of a £2.20 bitcoin lightning payment to that of a £2.20 Mastercard payment at the Gibraltar Bakery, one of several businesses that accept bitcoin lightning payments in Gibraltar as of recently.
The result of the test was clear: The lightning payment came in faster, but it’s important to mention that the comparison isn’t completely fair.
What in fact was compared was the speed of two different PoS (Point-of-Sale) systems.
To understand this, we need to take a look behind the scenes of how payments are settled.
- The lightning payment is almost instant and free, but final settlement of the payment happens on the bitcoin main chain at a later point. New blocks are mined approximately every 10 minutes, and these blocks contain recent bitcoin transactions. Once the transaction is added to a new block, its settlement is final.
- The Mastercard payment appears almost instant as well, but the payment will take days or weeks to settle in the background. Mastercard has to check its centralized “accounting ledger” against that of Gibraltar Bakery’s bank account. Using the traditional banking and clearing system, they have to make sure all accounting ledgers are in sync. Only once this process is completed, final settlement of the payment is possible.
Nevertheless, Joe’s video proves a point. The video reminds of bitcoin enthusiasts sharing clips of their experience paying with bitcoin at McDonalds and other major stores in El Salvador.
CoinCorner, with the help of Sandpiper Holdings Limited, managed to equip local merchants with Bitcoin Lightning Point-of-Sale devices. Customers can simply pay by scanning a QR code or by using an NFC-enabled Bitcoin Lightning card such as The Bolt Card from CoinCorner.
Neil Walker, managing director at Sandpiper GI, commented: “Whether you believe in Bitcoin or not, you can use the lightning network to cut your transaction costs and to pay via mobile.”
The fascinating thing about the Lightning Network is that businesses can use it to accept payments while dramatically cutting their fees. Most credit card networks as well as PayPal charge upwards of 1.5% per transaction and have a minimum transaction limit of 30 cents.
Micropayments of less than 30 cents are simply not viable using the traditional banking system.
With Lightning, you can make instant and almost free micropayments, which is a huge benefit for consumers. But for businesses the benefit is just as real. Being able to get rid of the 1.5% transaction fee can add a huge amount of money to the bottom line of businesses, especially ones operating on thin margins.
Gibraltar Bakery is not the only retailer to accept bitcoin lightning payments. Hotel Chocolat, Card Factory and Costa Coffee are all equipped with Lightning-enabled Point-of-Sale systems as well.
