Morgan Stanley Says Bitcoin’s Lightning Network Better Than Debit Cards

In a report released this week, global investment bank giant Morgan Stanley argued that bitcoin had reached a point where it is “more practical” for small payments than a debit card:

In outlining the reasons for its bold assertion, the report notes that bitcoin is progressing towards becoming a medium of exchange following an integration between Lightning Network-enabled Strike and BlackHawk Network, the world’s largest point-of-sale payment processor.

The integration, announced by Strike chief executive Jack Mallers at the 2022 Bitcoin Conference, allows consumers to pay in bitcoin using the Bitcoin network, and for merchants to receive US dollars without having to touch the asset.

Strike Announces Shopify Integration, Partnerships With NCR And Blackhawk  Bringing Bitcoin Lightning Payments To Major Merchants
Strike chief executive Jack Mallers at the 2022 Bitcoin Conference. Source: Forbes

Put differently, if a consumer pays in bitcoin, the merchant can elect to receive either US dollars or bitcoin in real time with instant final settlement at virtually zero cost.


By contrast, traditional payment processors such as Visa or Mastercard charge merchants a transaction fee of 1-3 percent, in addition to imposing a 45-60 day settlement period in which charge-backs are possible.

Visa, PayPal, Bitcoin or Lightning Network? Let's compare | by GeniePay |  Medium
Comparison of payment networks. Source: Geniepay

Lightning Network ‘More Practical’

Morgan Stanley noted that the “evolution of bitcoin usage as a medium of payment” will likely be driven by the ability of consumers to choose whether to pay for goods and services in physical locations with bitcoin through the Lightning Network.

This was largely because sending small payments was “more practical” with Lightning than debit cards, as Bitcoin’s layer-two solution can route transactions with next to zero fees. Furthermore, the banking giant expects that low transaction costs and merchant adoption will likely lead to less volatility in the asset over time.

In the US, where 85 percent of retail sales are still done in brick and mortar stores, this innovation is a potential game-changer for traditional retailers – a “superior payments experience”, as Jack Mallers would put it.

Many Twitter users found it astonishing that a Wall Street giant was effectively admitting that the Lightning Network was an improvement on the existing payments infrastructure:

It’s been more than a year since macro superstar Lyn Alden commented that people were “sleeping on the potential importance of Lightning”:

Based on available evidence, it appears that Alden’s comments were not only prescient but are playing out quicker than she could have anticipated.

Dale Warburton

Dale Warburton

Dale is a former attorney turned passionate Bitcoiner with an interest in investments, macro, geopolitics, innovation, tech, nature, wildlife, MMA and Bitcoin (of course).

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