04-02-2026Price:

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BITCOIN

Lightning splicing protocol opens Bitcoin to new micropayment models

Thursday, April 2, 2026 · from 3 podcasts
Bitcoin OptechBitcoin And | Bitcoin & E…Plebchain Radio
  • The Lightning Network can now resize payment channels on the fly, cutting user fees in half.
  • This technical upgrade enables scalable micropayments for music, streaming, and retail.
  • Square is already pushing Bitcoin payments to millions of merchants by default.

The plumbing for a Bitcoin micropayments economy just got installed. The Lightning Network’s splicing protocol, now officially merged into the specification after cross-implementation testing, solves a core liquidity problem. It lets users add or remove funds from a payment channel without closing it, collapsing what was once a mess of tiny channels into a single balance.

The practical impact is immediate. Phoenix Wallet already uses splicing to cut user fees by 50%. According to Bitcoin Optech, this architectural shift moves Lightning away from fragmented liquidity, more than doubling the potential throughput for large routing nodes. The protocol’s new scripting engine also solves a recursive fee trap that previously broke simple wallets during complex transactions.

This technical maturation arrives as commercial demand for micropayments surges. On Plebchain Radio, Nat Cole argued that Bitcoin’s Lightning Network is reviving a peer-to-peer music economy, replacing clunky BitTorrent sharing with instant, sub-cent streaming payments. The supply side is ready - artists are uploading tracks to platforms like Wave Lake - but the movement now needs curation and a killer app to match Spotify’s user experience.

Simultaneously, adoption is scaling at the point of sale. David Bennett noted on Bitcoin And that Square has flipped a switch, making Bitcoin and Lightning payments a default-on option for millions of US merchants. The system settles in dollars for the seller, abstracting away volatility and tax complexity. It positions Bitcoin as a background payment rail, not a speculative asset.

Dusty Daemon, Bitcoin Optech:

- Splicing at its core allows you to change the size of a Lightning channel.

- It is kind of like changing the size of the wings on a plane while it is flying.

The convergence is clear: the protocol is now production-ready just as real-world use cases need it. Splicing reduces the friction for users, whether they’re streaming a song or buying soap at a farmer’s market. The infrastructure for a permissionless micropayments economy is finally here.

PaymentsLightningAdoption

By the Numbers

  • 1160BOLT numbermetric
  • 50%fee reductionmetric
  • 8450PR numbermetric
  • 8856PR numbermetric
  • 8857PR numbermetric
  • 28.0.4Bitcoin Core versionmetric

Entities Mentioned

Adaptor signaturesProtocol
Bitcoin CoreProduct
BitmainCompany
BLOCKSPACESCompany
ChainalysisCompany
Core LightningTool
EclairTool
EltooConcept
FountainProduct
FROSTProtocol
Lightning Dev KitTool
LNDTool
PhoenixProduct
SegWitProtocol
SpotifyCompany
SquareCompany
TaprootConcept
WavlakeProduct

Source Intelligence

What each podcast actually said

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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
  • 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.
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.
  • 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.

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.
AI & Tech (1)
  • Chainalysis is introducing AI-powered blockchain intelligence agents trained on over a decade of its proprietary transaction data.
AdoptionRegulationMiningMacro
Plebchain Radio
Plebchain Radio

Sunday Brunch 12: Guest Host Aaron of Essex with Nat Cole • Mar 29

  • Cole's 'New Music Economy' vision uses Bitcoin's settlement layer to give artists economic access without platform permission.
  • Modern value-for-value tech revives the Napster-era peer-to-peer model, but replaces BitTorrent with instant Lightning Network micropayments.
  • Aaron of Essex notes the supply side is ready, with protocols built and artists across genres uploading tracks to permissionless platforms.

Also from this episode:

Society (3)
  • Nat Cole distinguishes Spotify's closed-loop 'ecosystem' from a 'new music economy' built on permissionless, direct participant interaction.
  • The bottleneck for Bitcoin-backed music is curation, not tech, requiring a fan base and digital 'radio' networks to surface quality.
  • Cole argues the 'New Music Economy' term distances the movement from the reputational baggage of 'crypto' and 'NFTs.'
V4V (1)
  • Apps like Wave Lake and Fountain have proven the concept, but a killer app with Spotify-level UX is still needed for mainstream adoption.
AdoptionPaymentsProtocol