Block adds new tool for Lightning network called ‘c=”
Jack Dorsey speaks at Bitcoin 2021 in Miami. Eva Marie Uzcategui—Bloomberg/Getty Images
Block, the payments company known for its Cash App and its lightweight trading terminals, has long kept Bitcoin on its balance sheet. Now the company is taking its support for Bitcoin a step further by deploying part of its crypto holdings to support the Lightning network, a so-called layer-2 system that makes Bitcoin payments faster and cheaper.
On Thursday, Block announced a new line of business it calls “c=” that will involve the company taking a portion of the 10,000-plus Bitcoins it has in its corporate coffers and storing them on the Lightning network. In doing so, Block will act as a liquidity provider on the new network, which is constructed of a series of peer-to-peer channels where transactions are conducted apart from the primary Bitcoin blockchain, and then recorded on the main chain.
I spoke with Nick Slaney, an executive who heads a Lightning-focused unit at the company called TBD, about the impact the new liquidity service will have on Block’s overall business. He said that Block is currently only distributing a small portion of its overall Bitcoin holdings to the project, but predicted that the new service would eventually grow into a significant revenue stream for the company. Slaney explained that the company will earn a few Satoshis – the smallest unit of a Bitcoin, worth a fraction of a penny – every time someone uses Block to help route a transaction on Lightning.
Slaney added that Block’s new service will be especially useful for merchants who accept payments through the Lightning network by helping them withdraw quickly. He also noted that while the Lightning network is still relatively small, it is growing rapidly and has received a boost from a new social network called Nostr that includes Bitcoin payments.
All of this is an interesting development for Block, whose co-founder and CEO Jack Dorsey — also the longtime CEO of Twitter before Elon Musk — has long been a Bitcoin booster. But it also reflects how Bitcoin, whose culture has long been defined by curmudgeonly hoarders (aka hodlers), has become much more innovative in recent years with the help of the Lightning network. This has been refreshing to see, especially since Bitcoin remains by far the most valuable blockchain in all of crypto.
Speaking of innovation, I’ll be spending the next two days at ETHDenver, an annual extravaganza where Ethereum devotees unveil new products and engage in colorful antics that often involve dressing up as unicorns and other strange creatures. The event can at times feel like the crypto-equivalent of Woodstock, but beneath the extravagant displays there is always an exciting flow of collective inspiration. I look forward to sharing more details tomorrow.
Jeff John Roberts
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@jeffjohnroberts
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