04-01-2026Price:

The Frontier

Your signal. Your price.

BITCOIN

Bitcoin splicing slashes Lightning fees as Square enables payments

Wednesday, April 1, 2026 · from 3 podcasts
Stacker News LiveBitcoin OptechBitcoin And | Bitcoin & E…
  • A new Lightning protocol upgrade lets wallets manage a single channel, cutting on-chain fees in half and improving reliability.
  • Square has switched on Bitcoin payments by default for millions of US merchants, creating massive passive adoption.
  • Together, these moves turn Bitcoin into a practical payment rail just as a generation seeks financial alternatives.

A major Lightning Network upgrade is going live at the exact moment it's needed most. The splicing protocol, now formally part of the Lightning spec, allows wallets to resize payment channels without closing them. For users, this means collapsing a mess of dozens of small channels into one seamless balance.

The impact is immediate and concrete. The Phoenix iPhone wallet, which already uses splicing, reported a 50% reduction in on-chain fees for its users. Dusty Daemon of Bitcoin Optech compared the process to changing the wings on a plane mid-flight. The technical win solves a recursive fee trap that had plagued automated channel management, making the network more efficient and user-friendly just as a huge new user base arrives.

That new base is coming from Square. The Block-owned payment giant has shifted its Bitcoin integration from a manual opt-in to a default-on setting for eligible US sellers. Millions of point-of-sale terminals are now potential Bitcoin gateways. David Bennett noted on *Bitcoin And* that a merchant can accept Bitcoin without ever touching the asset - Square handles the conversion to dollars, shielding sellers from volatility and tax complexity.

David Bennett, Bitcoin And:

- I can walk up to a square merchant today and unless that square merchant has purposely gone through the settings and turned off all Bitcoin functionality, then I will have the option to pay that invoice in Bitcoin or lightning.

- Square accepted the Bitcoin, not the merchant, which is an important distinction for the Internal Revenue Service.

This rollout abstracts the technology away, positioning Bitcoin as a background payment rail. The timing is critical. On *Stacker News Live*, the crew argued that younger generations, facing locked-out housing markets and stagnant mobility, are embracing a form of financial nihilism - seeking shortcuts in memecoins and speculation. Bitcoin, with these usability upgrades, offers a structured exit.

Further usability gains are in testing. Lexi, a wallet in public beta, runs a Lightning node in a phone's secure enclave. This allows users to receive payments even when their device is off, solving a major friction point for non-custodial wallets. Its model uses the same splicing spec, showing how the protocol upgrade enables new business approaches.

The convergence is clear. A core protocol improvement cuts costs and complexity at the infrastructure layer. A giant payment processor removes merchant friction at the application layer. The result is a network being hardened for real-world use as economic conditions push more people to look for alternatives. Bitcoin's role as digital gold isn't being replaced, but its utility as a functional payment system is being aggressively built - and used.

BTC MarketsPaymentsLightning

By the Numbers

  • 941,880Block height of two-block reorgmetric
  • 150,000Average block interval for deep reorgsmetric
  • 7Blocks mined by Foundry in 22 minutesmetric
  • $25 billionTeraFab facility costmetric
  • 1 terawattTeraFab annual production targetmetric
  • 80%Gen Z feeling financially behindmetric

Entities Mentioned

Adaptor signaturesProtocol
Bitcoin CoreProduct
BitmainCompany
BLOCKSPACESCompany
ChainalysisCompany
Core LightningTool
EclairTool
EltooConcept
FROSTProtocol
Lightning Dev KitTool
LNDTool
PhoenixProduct
SegWitProtocol
SpaceXCompany
SquareCompany
Stacker NewsProduct
TaprootConcept
TeraFabProduct
TeslaCompany

Source Intelligence

What each podcast actually said

Stacker News Live
Stacker News Live

SNL #217: The Ozempicization of Everything • Apr 1

  • Lexi is a public beta for an always-online Lightning wallet that runs in a secure enclave.
  • Lexi uses a modified LDK node to allow receiving Lightning payments when a user's phone is off.
  • Lexi's business model is LSP-based, taking a percentage of transactions, not charging per user.
  • Channel splicing allows resizing an existing Lightning channel by adding on-chain funds, eliminating the need to close and reopen.
  • The Bolt specification for channel splicing was merged after three implementations (Async/Phoenix, Core Lightning, LDK/Lexi) adopted it.

Also from this episode:

Protocol (3)
  • Jimmy Song, Samson Mow, and Parker Lewis are starting a 501(c)(3) nonprofit to create a conservative fork of Bitcoin Core.
  • The conservative Bitcoin client definition means no changes without nearly unanimous community approval.
  • Keon argues the rise of developer grants from nonprofits has correlated with developers pulling back from public communication.
Society (3)
  • Keon views non-profits as potential weapons of influence prone to status games, politicization, and corruption.
  • Kayla Scanlon's article states 80% of Gen Z and 75% of millennials feel financially behind, leading to financial nihilism.
  • Scanlon defines belief capitalism as narrative-based capital formation, which she accuses the broader crypto industry of engaging in.
Mining (3)
  • A two-block reorg at block height 941,880 occurred, an event that happens roughly once every 150,000 blocks.
  • Foundry mined seven blocks within 22 minutes around the time of the reorg.
  • Initial speculation that Foundry was selfish mining was later deemed incorrect; the reorg resulted from normal network propagation delays.
Chips (2)
  • Tesla and SpaceX announced a $25 billion joint chip fab called TeraFab in Austin, Texas.
  • The TeraFab aims to produce one terawatt of computer power annually, which would be the largest semiconductor fab ever built.
Climate (1)
  • A study detected cocaine, caffeine, and painkillers in the blood serum of sharks in the Bahamas, highlighting an emerging pollution risk.
SocietyPhilosophyBTC Markets
Bitcoin Optech
Bitcoin Optech

Bitcoin Optech: Newsletter #398 Recap • Mar 31

  • Dusty Damon, a long-time contributor, confirmed that BOLT 1160, which merges the splicing protocol into the Lightning spec, has been ratified.
  • A Lightning spec is merged only after a feature is implemented and tested across multiple implementations, analogous to HTML features working on multiple browsers.
  • Splicing was merged into the Lightning spec after successful implementation and testing across three different Lightning implementations.
  • Splicing allows users to change the size of a Lightning channel, which facilitates features like making on-chain payments directly from Lightning funds.
  • The Phoenix iPhone wallet uses splicing to manage a single channel per user, which resulted in a 50% reduction in fees and improved user experience.
  • Large Lightning routing nodes use splicing to balance channels and manage one-way payment flows, potentially more than doubling throughput capacity.
  • Dusty Damon is now working on ancillary features enabled by splicing, such as merging multiple transactions (splices, channel opens, on-chain payments) into a single transaction.
  • Merging transactions via splicing could enhance privacy, reduce transaction costs, and improve blockchain efficiency.
  • Z-Man suggested that focusing on swapping over splicing would have been more efficient due to swapping's smaller block space usage.
  • Dusty Damon acknowledged that 'batch splicing' is challenging, citing difficulties in establishing reputation and preventing malicious actors in multi-party transactions.
  • Core Lightning PR 8450 extends its scripting engine to support cross-channel splices, which involve moving funds between different Lightning channels.
  • A multi-channel splice involves more than one Lightning channel, encompassing actions like cross-channel splices or directing funds to cold storage.
  • Dusty Damon's splicing engine in Core Lightning solves dynamic fee calculation, a complex problem where adding inputs for fees increases transaction size, demanding more fees in a recursive loop.
  • The splicing engine aims to be a standalone library, minimizing dependencies on Core Lightning, and can manage complex channel states, ensuring correct fee rates and balances.
  • The engine prevents potential fund loss scenarios ('foot guns') by preventing users from incorrectly interacting with partially signed Bitcoin transactions (PSBTs) via online services.
  • Core Lightning PRs 8856 and 8857 introduce `splicein` and `spliceout` RPC commands, allowing users to add funds to or remove funds from channels directly.
  • `spliceout` will soon allow sending funds to any Bitcoin address, extending its current functionality of moving funds to an on-chain wallet or another channel.
  • This feature is foundational for rebindable transactions and advanced Layer 2 designs like LN-Symmetry, which could update channel states without old states becoming punishment vectors.
  • Core Lightning 26.04 Release Candidate 1 includes new splicing capabilities and adds an option for 'fronting nodes' in Bolt 12 offers to specify preferred routing peers.
  • Eclair PR 3247 introduces an optional peer scoring system to track forwarding revenue and payment volume, allowing nodes to auto-fund profitable channels or close unproductive ones.
  • LDK PR 4472 fixes a potential fund loss by ensuring transaction signatures are not released until the counterparty's commitment signature is durably persisted, securing channel state.
  • LND PR 10602 adds a `DeleteAttempts` RPC to its `Switch` RPC subsystem, enabling external controllers to manage and remove payment attempt records.
  • LND PR 10481 adds a Bitcoin Core (`bitcoind`) miner backend to LND's integration test framework, allowing tests for Bitcoin Core-specific features like V3 transaction relay.

Also from this episode:

Adoption (14)
  • Mike explained that Bitcoin transactions are public and do not use encryption, which is specifically about hiding information.
  • Bitcoin relies on digital signatures (ECDSA and Schnorr) to authorize spends without revealing private keys, using cryptographic math distinct from encryption.
  • Bitcoin Core now includes encrypted transport for communication between nodes, encrypting peer-to-peer traffic that was previously in plain text.
  • Bitcoin script gradually evolved to a commit-reveal structure, starting from Satoshi's raw public key design to Pay-to-Public-Key-Hash (P2PKH).
  • Pay-to-Script-Hash (P2SH) further extended commit-reveal by hashing spending conditions in the output and revealing the full script only at spend time.
  • Segwit and Taproot refined the commit-reveal approach, with Taproot being the most private by only revealing the specific script path used for spending.
  • Pay-to-Taproot (P2TR) multisig transactions reveal all public keys when spent via a script path due to the requirements of `OP_CHECKSIG` and `OP_CHECKSIGADD` opcodes.
  • For more private multisignatures, key-path spending in Taproot or emerging threshold signature schemes like FROST are viable alternatives.
  • `OP_CHECKSIGFROMSTACK` allows cross-UTXO signature reuse by signing an arbitrary message instead of binding to a specific transaction input.
  • Bitcoin Core version 28.0.4 is a maintenance release that backports bug fixes related to unnamed legacy wallet migration failures that affected version 30.
  • Luke Dash Jr.'s DNS seed was removed from Bitcoin Core (PR #33723) due to non-compliance with DNS seed requirements.
  • Bitcoin Core PR 33259 adds a 'Background Validation' field to the `getblockchaininfo` RPC response for assumed UTXO nodes, providing visibility into prior block validation progress.
  • Bitcoin Core PR 33414 enables Tor proof-of-work defenses for automatically created Onion services, requiring clients to perform work to connect, mitigating attacks.
  • Bitcoin Core PR 34846 adds new functions to the `libbitcoinkernel` C API to easily retrieve `nLockTime` and `nSequence` fields for checking BIP34 rules without manual deserialization.
ProtocolLightning
Bitcoin And | Bitcoin & Economic News
Bitcoin And | Bitcoin & Economic News

When VCs Attack! | Bitcoin News • Mar 31

  • Square is automatically enabling Bitcoin payments for eligible US sellers, shifting from an opt-in to a default-on setting.
  • Square's rollout leverages the Lightning Network for near-instant transactions, abstracting volatility for merchants who receive USD.
  • David Bennett argues Square's automatic Bitcoin acceptance shields merchants from IRS complexities, as Square, not the merchant, accepts the crypto.

Also from this episode:

Protocol (6)
  • A Google quantum AI paper claims breaking Bitcoin's encryption may require fewer than 500,000 physical qubits, below prior estimates of millions.
  • Google researchers designed attack methods requiring roughly 1,200 to 1,450 high-quality qubits, a fraction of earlier estimates.
  • The paper suggests a quantum attacker could have a 41% chance of beating a Bitcoin transaction by calculating the private key in about nine minutes.
  • Google's paper estimates 6.9 million Bitcoin, roughly a third of the supply, sit in wallets where the public key has been exposed.
  • The paper argues Bitcoin's 2021 Taproot upgrade expanded vulnerability by making public keys visible on-chain by default.
  • David Bennett suggests the quantum research, promoted by Nick Carter's Project 11, is a potential precursor to calls for faster Bitcoin blocks.
Markets (2)
  • Nakamoto sold 284 Bitcoin for $20 million in March, implying an average sale price of around $70,400 per coin.
  • Nakamoto's sale came at a roughly 20% discount to its year-end 2025 valuation of $87,519 per Bitcoin.
Stablecoins (2)
  • Standard Chartered reports stablecoin velocity has roughly doubled over two years, with tokens now turning over about six times per month.
  • Standard Chartered maintains its projection that stablecoin supply will reach $2 trillion by 2028, generating $1 trillion in demand for US Treasury bills.
Mining (2)
  • The Mined in America Act proposes certified domestic miners could sell newly mined Bitcoin to the US government in exchange for a capital gains tax exemption.
  • The bill highlights a national security risk, noting 97% of specialized Bitcoin mining hardware is produced by Chinese firms like Bitmain and MicroBT.
Adoption (1)
  • A proposed US Department of Labor rule creates a safe harbor for 401(k) fiduciaries offering crypto, covering a participant-directed market of $8.8 trillion.
AdoptionRegulationMiningMacro

Related Stories