Ark Labs Aims to Outshine Lightning with New Bitcoin Payments System

The Bitcoin community is poised for an exciting development as the team behind the layer-2 protocol, Ark, launches a new venture, Ark Labs. This innovative company is set to create a faster and more cost-effective payments system on the world’s largest blockchain, positioning itself as a formidable alternative to the existing Lightning Network.

Ark Labs was officially introduced in an announcement on Tuesday, marking a strategic move to address the demand for scalable, low-cost Bitcoin payments. The newly established firm has set two primary goals: to develop an open implementation of the Ark Protocol and to construct user-centric services, with the inaugural service slated for release later this year.

The Ark Protocol is engineered to facilitate off-chain payments while circumventing what its creator, Burak Keceli, describes as the “inbound liquidity” problem associated with Lightning. During an interview with CoinDesk a year ago, Keceli critiqued the Lightning Network by pointing out a fundamental flaw: “Lightning has many problems. But number one to me is the inbound liquidity problem,” he explained. “Imagine a payment system where you need money to receive money. This doesn’t make any sense.”

Although Keceli has shifted his focus to other projects, the vision he helped forge lives on through Ark Labs. The new company is dedicated to building upon and enhancing the groundwork laid by Lightning’s contributions to the Bitcoin ecosystem.

A key innovation of Ark is its approach to liquidity. Unlike Lightning, which requires users to lock in funds to initiate transactions, Ark employs service providers to offer 24-hour liquidity services for a fee. This model is designed to streamline the transaction process and enhance user convenience.

Furthermore, Ark’s off-chain payments are powered by an unspent transaction output (UTXO) model. This system utilizes virtual unspent transaction outputs (VTXOs) to enable unidirectional, one-time-only payments, optimizing transaction efficiency and security.

With the establishment of Ark Labs, the Ark Protocol is set to revolutionize Bitcoin transactions, offering a promising alternative to traditional methods and potentially reshaping the landscape of cryptocurrency payments.