Decentralized finance has long been viewed as an avenue for the world’s two billion unbanked people to access a financial system and consummate transactions securely. To illustrate the point the website Cointelegraph in May 2022 related the tale of a man identified only as Jorge, who lives in the Southern African nation of Mozambique.
According to the piece Jorge, who works as a surf instructor in the coastal town of Bomba (while also peddling arts and crafts and SIM cards), became the first Bitcoiner in town in 2021, a shrewd move in one of the poorest nations in the world. Only three of every 10 residents have bank accounts, and Mozambique’s per-capita GDP is just $448.
Jorge admitted to Cointelegraph that while few others in his homeland understand Bitcoin, he can buy and sell phone credit on the Bitrefill Bitcoin application, which enables payments to be made in Bitcoin via blockchain or the relatively new Lightning Network, a Layer 2 scaling solution introduced in 2018.
Among other things, Jorge added, the Lightning Network (or LN, as it is often known) enables him to toggle between the currencies favored in Mozambique and one of its neighboring countries, South Africa.
Despite Mozambique’s financial state, half of the country’s 31 million inhabitants have phone subscriptions, and 20 percent have internet access, meaning that such P2P transactions are increasingly possible. Jorge told Cointelegraph he has been able to support his family, which includes four children, as a result of his reliance on decentralized finance in general and the Lightning Network in particular.
As he put it, “Things are pretty.”
Certainly there are other instances that have illustrated the possibilities of the Lightning Network, which as noted makes it possible to consummate transactions off the main blockchain. Those transactions are executed rapidly and with negligible fees, a stark contrast to legacy banking institutions.
In February 2022, the mobile service Cash App integrated with the Lightning Network, enabling users to send Bitcoin to any LN or BTC address. A month later, Portland played host to the “Lightning Festival,” where the full scope of the network was on display. Fifty buyers used the LN to spend the equivalent of $1,800 in Bitcoin over three hours at various stands and shops, and vendors extolled the ease and efficiency of such transactions.
Clay Graham, founder of Rapaygo, a company devoted to enabling LN point-of-sales solutions, noted to Cointelegraph in the wake of that festival that the speed of the network was such that transactions “can clear as fast or faster than cards, so both the buyer and seller don’t feel that ‘where has my money gone.’ ”
In May, the introduction of the Bolt Card increased the LN’s network to an even greater degree, and perhaps not coincidentally network capacity achieved an all-time high of $113 million that month. That was exceeded one month later, when it jumped to $120 million.
It was at the latter point that Danny Brewster, CEO of the UK-based Bitcoin exchange Fast Bitcoins, told Cointelegraph that such “constant growth” represented “a great start” for the Lightning Network.
He added, “I foresee it continuing into the future, as long as all stakeholders, from developers to entrepreneurs building businesses continue to push forward.”