The cryptocommunity has much to celebrate this month after the popular peer-to-peer crypto exchange HodlHodl announced Lightning Network integration. Now, crypto traders can seamlessly buy and sell Bitcoin at reduced rates via this off-chain protocol. The move places HodlHodl in an exclusive class of Lightning exchanges currently in operation globally.
News of the integration came via a June 5th, medium post. In the post, the company detailed their experiences with the second layer protocol, and how its functionality would integrate into the current platform. Due to the fact that the Lightning Network is still in its Beta testing stages, HodlHodl decided on a different approach.
A New Strategy
Basically, HodlHodl decided it was best to break from their non-custodial strategy for Lightning Network transactions. In this case, HodlHodl holds funds in its native LN-wallet during the transaction. This strategy allows the exchange to protect both buyer and seller through the life of the contract.
According to the post, HodlHodl spent some time researching and testing the Lightning Network before coming to the decision to integrate it directly into the main platform. Company officials cited reduced rates, faster transactions, and a simpler customer UX as the main reasons behind the decision.
How to Start
Joining HodlHodl is easy and best of all, it’s free. Simply go to the registration signup page and fill in your information. Importantly, the exchange doesn’t require KYC compliance. Once signed up, you simply start a contract and wait until someone accepts your offer. Then, both parties deposit funds. Finally, users receive their trades directly into their LN-wallets.
Business as Usual
Notably, HodlHodl intends to keep the rest of the exchange fully non-custodial. Non-custodial exchanges differ from traditional exchanges in a couple of ways. Primarily, non-custodial exchanges don’t require you to deposit your crypto in an exchange hot wallet.
These wallets are often targeted by hackers and other nefarious actors because they can hold millions in crypto. According to one study, 2018 was a record-setting year for crypto hacks with over $1.5 billion in losses recorded. Unfortunately, these losses pale in comparison to 2019’s statistics. Already this year, thieves made out with $356 million in crypto.
Non-Custodial Exchanges are the Future
Non-custodial exchanges reduce the systemic risks associated with centralized exchanges. To put it simply, hackers see no reason to attack an exchange when it holds no crypto.
Also, users benefit from the fact that their crypto isn’t held up in trade or withdrawal delays. In many instances, exchanges lock their user’s ability to withdraw funds when a hack occurs. The most recent example of this behavior occurred during the latest Binance exchange hack. The exchange blocked withdrawals for days until correcting all security flaws.
When you examine the benefits of HodlHodl’s peer-to-peer approach to the market, it’s easy to see why this exchange continues to grow in popularity. The addition of the Lightning Network positions this exchange as one of the premier P2P platforms in the sector. Now, crypto users have a safer and more affordable way to conduct trades.