First Principles of Internet Money with the Lightning Network

Thinking through the ideal design of any new product or infrastructure is hard. Thinking from first principles can build a strong foundation. But even better is when we can derive these principles from an existing system that has endured some test of time and accumulated a Lindy effect. With this in mind, let’s consider the internet, versus money and payments on the internet. 

The internet has changed the world for the better, and yet money and payments over the internet are still one of a few categories of systems to be stuck in the past. We can connect live video streaming in real-time across physical infrastructure, cables, networks, and interoperate across multiple computer devices, operating systems, web browsers, and apps. 

Yet, for payments, it's absolutely not the same experience. Fragmented walled gardens, outdated tech stacks, clunky user experiences, and countless band-aid solutions from cohorts of fintech startups that are not standing the test of time against incumbents. Why is this? Probably because of a lack of first principle design. 

Traditional payments and money have not been subject to a rigorous redesign from the ground up, as compared with commerce or communications. Information technology applied selection pressure to brick-and-mortar businesses to evolve. Meanwhile, financial institutions have leveraged gatekeeping and red tape to artificially extend the lifespan of objectively terrible money and payment services. Any fintechs that succeed in such a system are co-opted into the walled garden to ensure that their slick user interfaces and consumer-friendly designs are merely fancy wrapping paper around the same old problems of high fees and long settlement times.

While traditional money and payments could not be disrupted and redesigned from first principles, it didn’t stop technology and innovators from starting a new kind of open-source money built from the ground up. In 2009, Bitcoin was released and took the world by storm because it followed the first principles of what made the internet work so well, and applied that to money. Which is why Bitcoin was dubbed as the Internet of Money.

But Bitcoin (and bitcoiners) did not stop there. Bitcoin was far from perfect as a means of payment. Improvements and proposals lead to additional protocols like the Lightning Network. Lightning builds upon the design principles of routing data across the Internet, and applies it to payments. The Lightning Network enables real-time low-cost payments with 24/7 availability, and interoperability like the internet has been doing for data.

In short, Bitcoin and Lightning Network are the technologies to make payments as smooth and awesome an experience as live video streaming over the internet. If you want to learn more about the benefits of Lightning for businesses, we’ve written about it at length.

It’s about time. Perhaps it’s 1990 all over again, and you see the advent of the internet and what it did to information. Could it do the same to money and payments? How do you convince people of this perspective of the future? This is what we think about at Neutronpay.

In a future article, we will explore more components of the Lightning Network that build on the internet’s design philosophy. This is why we believe Bitcoin and the Lightning Network will persist as an underlying infrastructure for digital payments and the decentralized web.

In the meantime, reach out to us if you resonate with our passion for first principle design, especially around money and payments. And, learn more about how to add Lightning Network’s features and benefits to your business, with a straightforward API integration: