- Morgan Stanley is bullish on the possibilities for wider use of the bitcoin Lightning Network as a consumer payment solution.
- They think that Lightning Network-based payment platform Strike can rival or even surpass digital payments giant Visa.
- Strike recently announced partnerships with Shopify and NCR, the world’s largest point-of-sale payment solution provider.
On Thursday, Morgan Stanley released a new report on the potential for bitcoin’s Layer 2 instant payment solution the Lightning Network to power a “long-term transition towards payments and settlements using digital and cryptocurrencies instead of fiat currencies like the US dollar”.
Morgan Stanley’s bullish report on the possibilities for wider use of the Lightning Network comes after Strike, a US-based digital payments platform built on top of bitcoin’s Lightning Network, announced a new integration partnership with e-commerce giant Shopify earlier this month.
US Shopify merchants will now be able to receive payments in US dollar from their global customers who paid in bitcoin. Strike also recently announced partnerships with NCR, the world’s largest point-of-sale (PoS) payments service provider.
Morgan Stanley Thinks Lightning Network Can Compete With Visa
In its latest report, Morgan Stanley laid out why it thinks Lightning Network-based digital payment platform Strike can rival or even surpass digital payments giant Visa.
“In essence, Strike is directly competing with Visa Direct, which offers real-time settlement”, Morgan Stanley notes, before adding that “the main difference for merchants will be charged a much lower transaction fee.”
The bank adds that “the benefit for the consumer is that they can, if they want, host their bitcoin on a private, secure network, allowing an element of privacy associated with their transaction”.
Regarding Strike’s partnership with NCR, Morgan Stanley notes the significance of the announcement. “One in six PoS devices globally use software provided by NCR, so this announcement is significant even if only a small proportion of retail shops choose to add the crypto functionality,” the bank states.
Drawbacks Of Using Bitcoin Payments
The Morgan Stanley report highlights some of the various drawbacks of using a bitcoin-based payment solution, including the cryptocurrency’s underlying volatility on a day-to-day basis, which makes the prediction of future purchasing power difficult.
Meanwhile, Morgan Stanley warns that current taxation laws also present a barrier to wider-scale adoption of bitcoin as a widely used medium of exchange, given that consumers must pay capital gains taxes on the cryptocurrencies they sell.
But the bank notes a new bill that is being proposed in the US Congress called the Virtual Currency Tax Fairness Act. The bill, if adopted, would exempt personal bitcoin transactions from tax so long as gains are below $200.
However, Morgan Stanley warns that this bill may face opposition, especially by anti-crypto contingents within Congress, given that it helps to position bitcoin (and other cryptocurrencies) as legitimate contenders to the US dollar.
Alex Gladstein, who summarised the Morgan Stanley report on Twitter, said that the report “suggests we are at the beginning of an era where more and more consumers may over time choose to pay for goods using Bitcoin and cryptocurrency”.