Lightning Labs announced Lightning Service Authentication Tokens (LSAT) on Monday, March 30. LSAT makes it possible to issue tokens via the Lightning Network that function as proof of payment for certain digital content or services. This new technology could be revolutionary for providers of paid digital content and services, reducing the barriers and annoyances of paywalls and subscriptions.

Many innovative things are possible with bitcoin, but there is still a lot to do in practice. For example, the implementation of bitcoin payments for online content and services is very promising, but there is still no universal standard method to implement it widely. Lighting Labs now seems to be taking an important step with the announcement of the Lightning Service Authentication Tokens (LSAT) protocol standard.

LSAT is a concept for a new Lightning Network protocol for payments and authentication. It forms a common foundation that allows APIs from different websites, services and wallets to communicate with each other to form a shared ecosystem. Based on this protocol, developers can develop software that is mutually compatible. Essential for large-scale adoption.

LSAT

At first glance, that may not sound that exciting, but it is. LSAT can be revolutionary because of the new possibilities it opens up and the innovative approach to solving existing problems.

With LSAT, for example, it is possible to provide users with a token for a (small) payment that gives access to certain services or online content. This can be a newspaper article or a video, but also, for example, access rights to rented server or processor capacity.

Such an LSAT token can be compared to an old-fashioned admission ticket or comparable proof of payment. Unlike a subscription or account, it is not registered in your name and you do not enter into any personal obligations with it, but the ticket is sufficient to prove that payment has been made.

Since the protocol does not work on the basis of identity, this provides many privacy benefits. After all, the protocol does not need to know who has paid, only that payment has been made. In the context of the social debate regarding privacy violations and the collection of ‘big data’, this may be a positive development. The traditional and often privacy-violating cookies have also been replaced in the tokens at LSAT by better macaroons .

Programmable

LSATs are also programmable. What you can do with them and how they can be used can therefore be set entirely according to your wishes. You can create different types of tokens where some give access to certain parts or services, and others to other parts. Access can be permanent or temporary, different access levels are possible and previously granted access can be revoked or upgraded.

It offers many of the same benefits and features of accounts and subscriptions, but without the hurdles of registration, identification or obligations.

Proper implementation could be even more user-friendly than credit card payments, according to Lightning Labs. In addition, the settlement takes place directly and without the intervention of third parties, so there is no risk of delays, cashbacks or defaulters.

It also offers advantages for the end user. They no longer have to deal with countless registrations and login codes for different websites and services, but can instead access all kinds of services via a single bitcoin wallet. Since LSATs are in principle not linked to identities, there is no risk that personal data will be stolen in the event of a hack on a service provider.

Instead of a fixed periodic payment with one service provider, the working method with LSATs is non-binding and you only pay for content and services that you actually use, with each desired service provider and to the exact extent that you determine. That is much less hassle and provides much more freedom.

LSATs & Microtransactions

The applications for LSATs are diverse, but become especially special when you combine them with microtransactions. These are transactions of very small amounts of money. These are problematic in the regular money system, because the bank costs are often higher than the payments themselves and, moreover, transactions of less than a cent are not possible.

Microtransactions are possible with bitcoin, because bitcoins can be divided to 8 decimal places (or even more via the Lightning Network) and thanks to the Lightning Network, transactions can be so cheap that they are almost free.

LSAT makes it possible to deploy that technology at scale and that could be revolutionary for the world of subscriptions and paywalls. Many providers of online content, such as online newspapers and video websites, now have a revenue model based on subscriptions, but they could also offer parts of their content ‘on demand’ via microtransactions and LSAT.

For example, a newspaper article or video could be viewed for a few cents, or even a fraction of a cent. With a few clicks of a button (or even automatically), a micropayment via bitcoin can provide access and then you only pay for what you actually view or use. That could be one piece of content or one page you visit, but you could even pay per sentence, word or letter.

Stream money

The applications only become really exciting when you take it even further. Payments can be so microscopic that you can send them one after the other as a kind of stream of microtransactions. A bit comparable to a stream of data packets in video streaming, only with money instead of data.

Streaming money creates the possibility for the first time to pay for something per second and to have the settlement take place immediately and directly. And thanks to LSAT you can do so without registration, identification, subscriptions or other obligations.

End-user costs can be low or even negligible; maybe just a fraction of a cent. This can lower the threshold for many people to pay for something at all and still be interesting for providers because of a high volume. For example, in the case of video makers or other content creators with a large audience, who now often depend on large market parties who claim a lot of the revenue.

But it also opens new doors for newspapers and other websites with a large international reach; the opportunity to earn not only a million times one euro, but also 100 million times one cent – or even less. Amounts that are so low and accessible that they open up an entirely new kind of economy.

For the time being, it is a vision of the future and not practice, but important contributions such as LSAT ensure that that future is getting closer and closer.

Want to know more about LSAT? Also take a look at the presentation of Roasbeef during the Lightning Conference in Berlin.