On December 2, 2019, Bitfinex formally knowledgeable its subscribers that it had added help for Lightning Network deposits and withdrawals. Subsequently, Bitfinex CTO Paolo Ardoino confirmed the data in a tweet.
A couple of days earlier than this announcement, Ardoino agreed to do an unique interview with Bitcoin Magazine to offer extra technical particulars in regards to the Lightning integration. This marked an enormous step within the improvement of Bitcoin and the Lightning Network, as a significant change lastly built-in second layer satoshis.
“I think that Lightning is definitely the best way to send and receive bitcoins,” stated Ardoino through the opening of the interview. “For me, [the Lightning Network] is exactly how the perfect payment system should be built.”
How Bitfinex Integrates Lightning Network
In regards to the method that customers should comply with as a way to ship their Lightning satoshis to Bitfinex, Ardoino described a system throughout which the change points a proprietary middleman token.
“The process is simple: you go on the Lightning Network deposit page, you generate an invoice, and then pay it with any Lightning wallet that you may use,” he stated. “Bitfinex will credit you LNX, our proprietary Lightning Network currency, and then you can exchange it on a 1 to 1 ratio for bitcoins.”
Bitfinex won’t cost a premium for exchanging second-layer satoshis for mainchain BTC (or vice versa). However, withdrawals can have the common charges.
“There is no premium in this step,” stated Ardoino. “However, we will apply a small fee when you process a withdrawal in the opposite way. But that’s it, we don’t apply any premium or any conversion rate for the service.”
From a technical standpoint, Bitfinex makes use of lnd — the consumer developed by Lightning Labs. However, as acknowledged by Ardoino, Blockstream’s c-lightning is considered a worthy substitute within the close to future.
“Right now we are running LND, but we are planning to add c-lightning,” he stated. “I like the c-lightning implementation because it feels more modular and plug-in based. It’s excellent as a base layer for additional developments, as it feels like a Linux kernel.”
The Bitfinex CTO additionally revealed that the selection of a Lightning consumer is the results of a partnership that can be introduced within the coming days.
“At the moment, we are using LND because it’s also what our partner uses for integrations. More information about this collaboration will be announced this Wednesday [December 4, 2019],” he teased.
Being on the Right Side of Bitcoin History
Ardoino additionally identified that Bitfinex has all the time positioned itself on the facet of Bitcoin innovation, and Lightning help is its follow-up to being pioneers in including bech32 addresses and implementing SegWit.
“I think that it’s really important for an exchange to finally show real support for the Lightning Network,” he defined. “If we don’t take a little more risk, we will not be able to keep up with the innovation with which our industry is used. Bitfinex will do its part and has always worked to open the path for everyone else: you saw that with bech32 addresses and early SegWit adoption.”
In the approaching days, Bitfinex will publish the entire details about connecting to its public node as a way to open channels. Also, as clarified by Ardoino, tutorials can be offered in a number of languages as a way to provide seamless onboarding.
Last however not least, Ardoino additionally addressed safety issues which may come up in adopting new expertise.
“If an exchange loses a few thousand dollars worth of BTC in order to improve and push the growth of this great technology, I think that the situation is not problematic at all,” he stated. “It’s part of the risk that you’re taking when running an exchange. The best step we can take is to embrace Lightning early and prove that the technology is not as bad or insecure as it gets described.”