Bitcoin Lightning Payments and Stablecoin Payments Go Live! Cash App's Revolutionary Update Shakes the Market

Cash App has launched 11 product updates, including Bitcoin Lightning payments and stablecoin payment features. The company stated that it has made over 150 improvements to meet the needs of millions of users in earning, managing, and sharing funds. The highlight of the Bitcoin Lightning payment feature is that users can make payments through the Lightning Network even if they do not hold Bitcoin, with the system automatically converting their dollar balance into Bitcoin. The stablecoin payment feature allows users to send and receive dollar-pegged tokens.

Cash App Bitcoin Lightning Payment Breaks Holding Threshold

(Source: Cash App)

Cash App is developed by Block Inc., a company co-founded by long-time Bitcoin supporter Jack Dorsey. This payment application was completed under Dorsey's leadership, who also co-founded the social media platform Twitter, which was later acquired by Elon Musk and renamed X. As a Bitcoin bull, Dorsey's belief in cryptocurrency has directly driven Cash App's aggressive layout in the digital asset space.

In the latest update of Cash App, the Bitcoin Lightning payment feature has achieved a key breakthrough. Even if users do not hold Bitcoin, they can use Bitcoin for payments through the Lightning Network, and the system will automatically convert their dollar balance into Bitcoin. Block stated: “Eligible users can choose dollars as the currency option after scanning the Lightning Network QR code, allowing them to make fast, low-cost payments using their Cash App dollar balance without actually holding or using Bitcoin.”

This design addresses the core pain points of Bitcoin payments. For a long time, Bitcoin has faced two major obstacles as a payment tool: price volatility risk and holding thresholds. Ordinary users are concerned about the price drop during the holding period of Bitcoin and are also confused about how to securely store private keys. Cash App's automatic conversion mechanism completely eliminates these concerns, allowing users to simply maintain a USD balance, with the system instantly converting it to Bitcoin at the time of payment and settling through the Lightning Network.

The Lightning Network is a second-layer scaling solution for Bitcoin that enables instant, low-cost microtransactions by establishing payment channels. In contrast to the Bitcoin main chain, where each transaction can take minutes to hours to confirm and incurs high fees, Lightning Network transactions are completed almost instantly, with fees typically below $0.01. This performance makes the Lightning Network more suitable for everyday payment scenarios, such as buying coffee, convenience store purchases, or small transfers.

Customers can also use Bitcoin to pay at merchants that accept Bitcoin. Square merchants can choose to receive payments in USD to USD, Bitcoin to Bitcoin, Bitcoin to USD, or USD to Bitcoin. This flexibility provides merchants with four settlement options to meet different risk preferences and accounting needs. Merchants who wish to hold Bitcoin as a reserve asset can choose Bitcoin to Bitcoin, while those concerned about volatility risk can opt for instant conversion to USD.

Last month, Square Bitcoin launched a new feature that allows merchants to accept Bitcoin payments without transaction fees until 2027. Analysts from Mizuho Bank stated that this move represents a “significant test” of whether cryptocurrencies can evolve from a store of value to a means of everyday payment. According to data from The Block, Block holds 8,692 Bitcoins, worth approximately $858 million, which demonstrates the company's strong belief in the long-term value of Bitcoin.

Stablecoin payment function takes over the cross-border remittance market

In addition to Bitcoin Lightning payments, Cash App has also launched a stablecoin payment feature, allowing users to send and receive dollar-backed tokens. The launch of stablecoin support on the payment platform Cash App comes at a time when the usage of dollar-backed tokens has reached an all-time high. In addition to major U.S. financial institutions showing interest or launching related measures on their own, Cash App's competitor Zelle may also begin using stablecoins. Zelle's operating company Early Warning Services has recently begun to explore the possibility of using stablecoin technology for international transfers.

The advantage of stablecoin payments lies in the combination of the instant settlement characteristics of cryptocurrencies and the value stability of fiat currencies. Traditional cross-border remittances typically take 3 to 5 business days, with fees as high as 5% to 10% of the remittance amount. In contrast, using stablecoins such as USDC or USDT for cross-border transfers can be completed in a matter of minutes, with fees usually below 1%. This efficiency and cost advantage has led to the rapid adoption of stablecoins in scenarios such as cross-border remittances, cross-border e-commerce settlements, and freelancer payments.

Potential Application Scenarios for Cash App Stablecoin Payments

Cross-border Family Remittances: Immigrants working in the United States can send remittances to their hometown relatives at low cost, and the recipient can choose to keep the stablecoin or exchange it for local currency.

Freelancer Payments: Global freelancers can receive USD-denominated payments through stablecoins, avoiding bank intermediaries and exchange rate losses.

Cross-Border E-commerce Settlement: Cross-border sellers can receive payments in stablecoin, bypassing high transaction fees from traditional payment platforms like PayPal.

Crypto Investment Deposit: Users can convert US dollars to stablecoins and quickly transfer them to cryptocurrency exchanges for investment.

Owen Jennings, the CEO and Business Head of Block, stated: “The way people earn and manage money has undergone a fundamental transformation, while traditional financial institutions have failed to keep pace with the times and meet their needs. At Cash App, we are focused on creating a platform that reflects how today's customers actually engage in economic activities.” This statement highlights Cash App's strategic positioning: not simply replicating traditional banking services, but reimagining financial infrastructure that aligns with the digital economy era.

Challenge Zelle and Traditional Banking Systems

Cash App has launched Bitcoin Lightning payments and stablecoin payment features, directly challenging Zelle's position in the U.S. digital payment market. Zelle, launched by major banks in the U.S., is deeply integrated with the traditional banking system, processing over $800 billion in transactions in 2023. However, Zelle is limited to domestic transfers within the U.S. and relies entirely on traditional banking infrastructure, unable to offer cross-border payments or cryptocurrency settlements.

Early Warning Services' exploration of stablecoin technology indicates that traditional financial institutions are also aware of the threat posed by cryptocurrencies in the field of cross-border payments. If Zelle truly integrates stablecoin functionality, it will create positive competition between Cash App and the traditional banking system. This competition will ultimately benefit consumers by driving down cross-border payment costs and improving efficiency.

The advantage of Cash App lies in its native cryptocurrency genes and the speed of product innovation. The company started supporting Bitcoin trading as early as 2018, ahead of most traditional financial institutions. The simultaneous launch of Bitcoin Lightning payments and stablecoin payments demonstrates its maturity in product development and regulatory compliance. In contrast, traditional banks are often hampered by internal processes and regulatory concerns when integrating cryptocurrency features, resulting in a slower pace of innovation.

On November 13, U.S. stocks closed down, with Block's stock falling more than 5% to $62.30 due to the market pullback. This short-term price fluctuation does not negate the long-term value of the Cash App product updates. Analysts believe that if the Bitcoin Lightning payment and stablecoin payment features can be successfully promoted, it will significantly enhance user stickiness and transaction frequency for Cash App, ultimately reflected in revenue growth.

Cryptographic Payments from Ideal to Reality

The latest update from Cash App marks a key turning point in the shift of cryptocurrency payments from a technical experiment to mainstream application. In the past, Bitcoin payments were mainly limited to cryptocurrency enthusiasts and early technology adopters, while ordinary consumers shied away due to technical barriers and price volatility. Cash App minimizes these obstacles through an automatic conversion mechanism and stablecoin options.

When millions of Cash App users can seamlessly use Bitcoin Lightning payments and stablecoin payments, network effects will form rapidly. More merchants will be incentivized to accept these payment methods as the user base already exists. More users will try to use these features as more and more merchants accept them. This positive cycle could drive crypto payments into the mainstream, fulfilling Satoshi Nakamoto's original vision when designing Bitcoin: a peer-to-peer electronic cash system.