In a recent interview with CNBC, former PayPal president David Marcus said that in his opinion Bitcoin lightning network will be increasingly used as a layer to transfer money between different countries.
This is because traditional fiat payments are very expensive and sometimes require very long waiting times.
The very low cost and fast execution of Bitcoin transactions with LN would be the factors that could trigger the technology’s boom in the foreign payments market, according to Marcus.
Contrary to the words of its former president, however , PayPal seems to be betting more in the world of stablecoins, particularly in the cryptocurrency it created itself PYUSD, i.e., a cryptocurrency pegged to the value of the U.S. dollar.
The latter saw a sharp increase in its supply a few days ago, leading its capitalization to exceed the $100 million mark, confirming the increased demand for the digital asset in the Ethereum blockchain.
Full details below
According to former PayPal president, Bitcoin lightning network will be used for digital money transfers between foreign countries
Recently David Marcus,co-founder of the Lightning Network service provider “Lightspark” as well as former president of PayPal, revealed in an interview with CNBC that he is convinced of Bitcoin’s potential as a currency for global payments.
According to him to date the transfer of data and information works very well on the traditional web, while sending and receiving digital money fiat can be difficult, especially when conducting a transaction between two parties from different countries.
Just think that in the United States, to use many of the fintech apps that allow you to send money to parties residing outside the country, you have to go to a local bank and pay a $50 fee for an international wire transfer.
Added to this is the long waiting time for successful transactions, which can sometimes exceed 3-4 days if you are close to the weekend. This is why according to the former president of PayPal we are still in the “fax era” in the world of cross-border fiat payments.
Bitcoin could solve this problem by leveraging its decentralized structure that serves as a universal protocol for transferring money over the Internet. Moreover, the presence of the secondary Lightning Network (LN) layer gives Bitcoin the ability to be exchanged at low cost and with very fast execution times.
Marcus is a big believer in the development and advancement of the international cryptocurrency payments industry, so much so that he has invested resources in the startup Lightspark that he co-founded and that to date is involved in building infrastructure on the LN.
According to him, Bitcoin will not be used in the future as everyday cash to go shopping, but mainly for transferring money abroad.
These are his words to CNCB:
“Our view is that Bitcoin is not the currency that people will use to buy things. Rather, Bitcoin will be used to send U.S. dollars to someone who will eventually receive them in the form of Japanese yen or euros on the other side of the world.”
With the lightning network BTC can be sent anywhere in the world by paying a negligible fee of 4-5 cents and finalizing the transaction in seconds. In recent months the trend of using this Layer-2 infrastructure, has been growing steadily but is observing a decline in recent days.
According to data from The Block, although in September the network recorded a peak of 589 thousand transactions per day (7-day average), it has been seeing little use by users lately, with such low values not seen since March this year.
In any case, if we broaden the time horizons, we see that the number of nodes and P2P channels in LN have more than doubled since the 2021 data.
The use of stablecoin in the cross-border payments market and PayPal proactive approach
PayPal, unlike its former president in office from 2011 to 2014, believes that stablecoins will drive the cross-border transfer market in the future and not Bitcoin.
While in fact Marcus is currently working to expand the capabilities of the lightning network, the California-based tech company decided in August to launch its own cryptocurrency, whose value is pegged to that of the U.S. dollar, and which runs on the Ethereum blockchain.
PayPal has thus become the first major financial tech bigwig to fully embrace stablecoins as a resource for digital payments.
PYUSD, launched in partnership with Paxos, has been an immediate success within the cryptocurrency community, reaching the $100 million mark in market capitalization in just over a few months following a massive increase in its supply.
In detail, according to CryptoQuant data, the total number of PYUSDs in circulation to date stands at 117.9 million, an increase of 77 million in the past two weeks.
PayPal’s approach testifies to the company’s view that the stablecoin market will grow greatly in the coming years and overtake Bitcoin as the digital cash used for overseas transfers.
According to recent research by Juniper Research, this sector will reach $187 billion by 2028, going up 250% from the projected $53 billion through 2023.
Moreover, also by 2028, the value of cross-border payments will reach a 73% share of total payments made in stablecoins, becoming the predominant use case.
In contrast to the capacity constraints still present in the lightning network today (albeit with strong development in recent years), Ethereum‘s infrastructure has all the makings to fully scale the market without any constraints.
Moreover, the expansion of layer-2 rollups within the crypto network also allows it to be competitive on the fees front, considering the low cost for transactions that are validated off-chain.
Nick Maynard, author of the cited research at the British fintech company, explained the expansive phenomenon of stablecoins using these words:
“Stablecoins have vast potential to unlock the flow of money across borders, but payment platforms must implement acceptance strategies for this to progress. MTOs (Money Transfer Operators) can leverage stablecoins in a wholesale manner, but this will require building networks across large geographic footprints.”
PayPal in response to the need for a platform for stablecoin payments, has decided to put its face on it and offer its customers its own exchange currency, with near-stable value and relying on one of the world’s highest cryptographic security standards.