Blockchain payments are secure, censorship resistant, trustless and have open and permissionless API. Unfortunately they’re also relatively expensive and slow (ethereum transaction may cost up to dollar and took up to couple of hours to be included into block).

Situation with centralised payment solutions like PayPal or Stripe isn’t much better. Despite many legal limitations (not accessible in some countries, requires to have credit cards and pass KYC procedures even for getting small amounts) they are also quite expensive — PayPal charges $0.05 and 5%, Stripe charges about $0.25 and 2.9% of transaction value.

1tx/s * 60 sec * $0.05 = 3$ per hour for transaction fees! :(

Solving blockchain scalability problems

Scalability is a network’s ability to grow and handle more users. Blockchain networks can be slow and clogged up by all the transactions being processed.

While ethereum core team is working on main layer upgrade (Ethereum 2.0), many teams across the industry are working on Layer 2 solutions — independent networks or chains running “on top” of the original blockchain to avoid it becoming too crowded and slow.

The two most popular Layer 2 solutions being developed are Plasma and State Channels. Plasmas are more complex and suffer from issues related to their centralised operators, while State Channels are arguably more decentralised. State Channels also better serve our use case because they are P2P and scale well with micropayments. As the core foundation of the widely-used Lightning Network they are well tested and are simpler to implement.