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Binance Setting Up Lightning Nodes: Is Bitcoin Becoming a Payment Network?

Last Updated June 26, 2023 7:44 AM
Omar Elorfaly
Last Updated June 26, 2023 7:44 AM

Key Takeaways

  • Binance sets up Lightning network nodes to speed up Bitcoin transactions
  • Are big firms only betting on Bitcoin>
  • BlackRock and Fidelity are Setting up BTC ETFs
  • SEC is Happy with Bitcoin as a crypto

The world’s biggest crypto exchange, Binance has announced  setting up nodes to fully integrate the Bitcoin Lightning Network into its transaction system. The network is meant to speed up Bitcoin deposits and withdrawals for customers, supporting up to 1 million transactions per second. This integration will make Bitcoin operate well as a payment network, and a store of value — Could Bitcoin become the one-stop-shop of crypto?

In other news, the $9 trillion asset management company, Blackrock Investments has applied  for a Bitcoin spot trading ETF with Coinbase as its operating platform. The move is expected to bring in an unprecedented sum of investment into the market, and notably to Bitcoin.

Moreover, Fidelity Digital Assets (FDA), one of the biggest asset management firms, is rumored  to either be applying for a Bitcoinspot trading ETF or bid for a takeover of currently troubled asset management firm Grayscale, another indicator of institutional interest in the world’s biggest crypto.

Bitcoin has also been relatively untouched during SEC challenges against platforms over the legal status of altcoins, such as XRP, ADA and SOL. SEC Chair Gary Gensler himself was spotted in a presentation claiming it “a commodity.”

The world’s biggest exchange is enhancing Bitcoin trading, the world’s biggest asset owners are investing large sums in Bitcoin, and the regulating commission is green-lighting Bitcoin: Is Bitcoin the only future for digital currencies?

Binance’s Bitcoin Lightning Network

The world’s biggest crypto exchange has officially started integrating the Bitcoin Lightning Network into its platform. The same network is used by the platform’s biggest rivals, such as Kraken. Bitcoin Lightning Network will facilitate speeding up transactions while charging less fees on each transaction.

In May, Binance temporarily halted Bitcoin withdrawals, citing the reason being a congestion issue.

After fixing the issue, Binance decided to announce their plans for integrating the Bitcoin Lightning Network, saying “To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed.

Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.”

Keeping in mind that Binance is facing legal issues with the SEC, a potential exit from the European market, and a potential federal case with the US Department of Justice, it’s curious to see the platform making moves to trade more Bitcoin. The following factors may explain it.

Old Money, New Money

Blackrock, a staple name in the world of asset management and investments, has officially applied for a Bitcoin exchange-traded fund. The move opens the crypto market to tycoon investors. 

Although the SEC is yet to approve the request, Blackrock has had a staggering success rate of getting their ETFs approved of 575-1 .

“The fact that BlackRock is filing now speaks volumes,” said Nate Geraci, president of the ETF Store, adding that “BlackRock typically isn’t in the business of making unforced errors, and betting on a spot bitcoin ETF if they weren’t confident in approval seems like an unnecessary gamble.”

Blackrock will be working with Coinbase, using their platform as a custodian of their crypto assets. Coinbase uses Xapo, an institutional-scale crypto custody tool they acquired in 2019. 

Considering Coinbase is also battling the SEC over its legal status as a digital assets trader, it’s once again curious to see Blackrock betting its money on it.

More Big Money

The “crypto curious ” asset management firm, Fidelity, worth over $4.24 trillion, is also rumored to throw a hat in the crypto ring. Experts speculate that Fidelity will either apply for a spot trading ETF or will make a move to acquire Grayscale. 

To put things in perspective, Grayscale  runs 17 cryptocurrency trusts, including single and multi-asset funds. Grayscale has been attempting to convert its largest cluster of assets, GBTC, into a spot Bitcoin ETF for over a year now. The SEC has, so far, denied every attempt to make that conversion happen. As a result, Grayscale filed a lawsuit  against the SEC.

Fidelity, being the world’s third-largest asset management company is bound to reshape the crypto (specifically Bitcoin) trading industry by bringing in large sums of investments that are currently under the scrutiny of regulators. But, how do regulators feel about Bitcoin?

SEC Chair Is Fine With Bitcoin

The SEC has seemingly been adamant about fighting the crypto industry with every opportunity it gets. Whether trying to take down Binance with a long list of lawsuits, or fight against Coinbase over whether cryptocurrencies should be considered securities, the SEC has been on the offense, with no end to the war anytime soon.

Coinbase executives have even appealed to the federal government to push the SEC to create clear regulations over the crypto market, in an attempt to finally achieve clarity on what these exchanges are allowed to do.

The SEC is even in a legal battle with Ripple, a crypto trading platform over allegations of trading unregistered securities, namely XRP. 

But, one theme has been a constant. The SEC has rarely involved Bitcoin in legal deliberations with these crypto firms. The government has even used Coinbase, the firm currently under legal scrutiny from the SEC, to sell off Bitcoin it had seized earlier during an arrest.

To top it all off, Gary Gensler, SEC Chair, before taking his post, did an interview with CNBC, where he said “Some, like bitcoin, and that’s the only one, Jim, I’m going to say because I’m not going to talk about any one of these tokens [that] my predecessors and others have said [are] a commodity.”

Gensler is the same individual at the helm of the regulating committee that seemingly will stop at nothing until it single-handedly destroys the crypto industry in the US. 

But, Why Bitcoin?

Bitcoin was the first-ever cryptocurrency, achieving complete decentralization and pushing blockchain technology forward into the world. Bitcoin is also the highest-valued crypto token. The cryptocurrency is also the most commonly traded globally, in exchange for services and goods.

There isn’t a single international crypto exchange platform that will not take your Bitcoins and help you trade them.

With all of the factors mentioned above, one must think Bitcoin might end up being not only the first but potentially the only cryptocurrency to be viable in the future of the US’s crypto industry. Seemingly all of its stars are aligning: Big money flowing in, regulators opening doors for its trade, and technologies being developed specifically to expedite its exchange among wallets. 

Does Bitcoin’s potential skyrocket spell doom for altcoins?