In late September, social media platform Twitter announced1 a new feature called “Tips” that will allow users to easily receive payments via different platforms such as CashApp, Patreon but also via cryptocurrencies. The “Tips’ feature will gradually be available on IOS and later on Android.
Twitter will support Bitcoin tips using the Lightning Network. Up until now, a lot of users were putting their crypto addresses or payment links in their Twitter description box to receive payments from others. With this new feature, Twitter users will be able to directly receive Bitcoin payment with Strike, a payment software using the Bitcoin Lightning Network. For the moment, the Strike application is only available to people in El Salvador and in the US.
So, what exactly is the Bitcoin Lightning Network?
The main issue with the Bitcoin network is scalability; the network can process around 7 transactions per second (TPS) against 4,000 for Visa. The aim of the Bitcoin Lightning Network is to solve this scalability issue.
The Bitcoin Lightning Network is a second layer built on top of the Bitcoin blockchain allowing the creation of private payment channels between users. The Network processes cheaper and faster transactions that are still benefiting from the security and decentralization of the Bitcoin blockchain. The aim is to solve the problem of scalability of the Bitcoin network.
The Lightning Network creates payment channels between users. These channels remain open as long as necessary and allow users to make instant transactions with low to non-existing fees. Channels openings and closings will be recorded on the Bitcoin blockchain and thus remain transparent. The Lightning Network is thus very suitable for micropayments.2
Scorechain supports the Bitcoin Lightning Network
Lightning Network payment channels add additional layers of anonymity to the transactions since it is not possible to know what is happening in a channel. Because of this, Lightning Network channels can be considered to represent an increased level of AML/CFT risk.
Scorechain supports Lightning Network transactions in its Bitcoin platform since 2019. The platform is able to identify Lightning Network transactions and provides data on the following:
- Channel openings/closings;
- Lightning node IP and geolocation
Scorechain users can easily spot Lightning transactions and are promptly alerted if the address checked is linked with a Lightning transaction. Moreover, depending on the user’s risk appetite, it is possible to set “payment channel” as a risk indicator. (Read more: Lightning Network: how to have an appropriate AML risk-based approach?)
This is one of the many features provided by Scorechain to help crypto businesses and financial institutions to adopt a risk-based approach to crypto transaction monitoring.
Would you like to discover how we help companies operating with cryptocurrencies in their compliance journey? Don’t hesitate to reach out.
Scorechain is a Risk-AML software provider for cryptocurrencies and digital assets. As a leader in crypto compliance, the Luxembourgish company has helped more than 200 customers in 40 countries since 2015, ranging from cryptocurrency businesses to financial institutions with crypto trading, custody branch, digital assets customers onboarding, audit and law firms, and some LEAs.
Scorechain solution supports Bitcoin analytics with Lightning Network detection, Ethereum analytics with all ERC20 tokens and stablecoins, Litecoin, Bitcoin Cash, Dash, XRP Ledger, and Tezos. The software can de-anonymize the Blockchain data and connect with sanction lists to provide a risk scoring on digital assets transactions, addresses, and entities. The risk assessment methodology applied by Scorechain has been verified and can be fully customizable to fit all jurisdictions. 300+ risk-AML scenarios are provided to its customers with a wide range of risk indicators so businesses under the scope of the crypto regulation can report suspicious activity to authorities with enhanced due diligence.