Block, the payments firm known for Cash App and its lightweight merchant terminals, has long held 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 business line it’s calling “c=” that will entail the company taking a portion of the over 10,000 Bitcoins it holds in its corporate treasury and storing them on the Lightning network. In doing so, Block will serve as a liquidity provider on the fledgling network, which is constructed of a series of peer-to-peer channels where transactions are conducted apart from the primary Bitcoin blockchain, and then later recorded on the main chain.
I spoke with Nick Slaney, an executive who leads a Lightning-focused unit of the company called TBD, about what impact the new liquidity service will have on Block’s overall business. He said that Block, for now, is deploying only a small part of its overall Bitcoin holdings to the project, but predicted the new service would in time grow into a significant revenue stream for the company. Slaney explained that Block will earn some Satoshis—the smallest unit of a Bitcoin, worth a fraction of a penny—each time someone uses Block for help routing a transaction on Lightning.
Slaney added that Block’s new service will be especially helpful to merchants who accept payments via the Lightning network by helping them cash out quickly. He also noted that, while the Lightning network is still relatively small, it’s growing fast and has gotten a boost from a new social network called Nostr that incorporates Bitcoin payments.
All of this is an interesting development for Block, whose cofounder and CEO Jack Dorsey—also the longtime CEO of Twitter prior to Elon Musk—has long been a Bitcoin booster. But it reflects as well how Bitcoin, whose culture has long been defined by curmudgeonly hoarders (a.k.a. Hodlers), has become a lot more innovative in recent years with the help of the Lightning network. This has been refreshing to see, especially as Bitcoin remains by far the most valuable blockchain in all of crypto.
Speaking of innovation, I will 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 outlandish creatures. The event can feel at times like the crypto equivalent of Woodstock, but beneath the extravagant displays there is always an exciting current of collective inspiration. I look forward to sharing more details tomorrow.
Jeff John Roberts
[email protected]
@jeffjohnroberts
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