Jack Dorsey’s Block to Tap Bitcoin Reserves for Lightning Network

Jack Dorsey’s digital payment company Block Inc. said it will be using its own Bitcoin reserves to provide liquidity to Bitcoin’s Lightning Network.

Jack Dorsey’s Block to Tap Bitcoin Reserves for Lightning Network. (REUTERS)

Jack Dorsey's digital payment company Block Inc. said it will be using its own Bitcoin reserves to provide liquidity to Bitcoin's Lightning Network, a protocol meant to make transactions on the blockchain more efficient.

TBD, the Bitcoin-focused unit of Block, plans to launch a so-called Lightning Service Provider named c=, hoping to reduce failed transactions on the Lightning Network stemming from a lack of liquidity.

The Lightning Network, built on top of the Bitcoin blockchain, enables users to send and receive payments faster and for less money than processing a transaction directly on Bitcoin's blockchain.

While Bitcoin is designed to be a permissionless peer-to-peer payment network, transactions confirmed directly on the blockchain can take as long as one hour before they are irreversible and even smaller payments may have relatively high fees, according to a Lightning Network white paper.

Based in San Francisco, Block was one of the earliest digital payment platforms to allow Bitcoin transactions. Last year its Cash App generated $156 million in Bitcoin gross profit, according to a shareholder letter. It's also developing more decentralized Bitcoin mining solutions in addition to its wallet services.