Investment

A Norwegian billionaire and why he’s backing a platform that could make bitcoin mainstream

Norwegian billionaire Kjell Inge Røkke has stepped up his backing for ultra-fast bitcoin payment systems by investing in equipment provider Breez. His adviser, bitcoin pioneer Adam Back, has revealed its own provider, Greenlight, through Blockstream, backed by Hong Kong billionaire Li Ka-shing.  

It comes at a time when family/principal investment offices are upping their investments in cryptocurrency platforms as this week’s Family Capital Deals data shows.

The new payment system, known as the lightning network, has also been endorsed by Elon Musk and Jack Dorsey, founder of Twitter. Røkke sees huge potential in its proposed ecosystem.

The network is said to be capable of handling a million transactions per second, against the seven which can be achieved in a standard bitcoin transaction, perceived as a weakness in the system. 

Lightning could dramatically scale up bitcoin transactions, helping it prove its worth, beyond rampant speculation over its potential as a safe haven which saw bitcoin hit $63,000 in April, then fall to $29,000 in July before recovering to $38,000 as the SEC accepted its impact but warned of the need for tougher regulation to prevent money laundering.   

On 21 May, Elon Musk tweeted that the lightning network would help bitcoin achieve greater scale. More recently, El Salvador president Nayib Bukele endorsed the lightning network and pushed ahead with plans to make bitcoin an official currency, alongside the dollar.

This means his citizens will collect their pay in bitcoin wallets and use it to pay their way without resorting to a discredited banking system, assuming old mobile phones and sparse internet coverage can deal with it all. Latin America, with its history of banking crises and inflation, could see lightning strikes elsewhere over time, according to analysts. 

Røkke has invested in Tel Aviv’s Breez through Seetee, an offshoot of his industrial group Aker dedicated to bitcoin opportunities. Other Breez investors include Japan’s Recruit Strategic Partners which backs innovative start-ups and Oleg Mikhalsky’s Fulgur Ventures, a regular backer of decentralised finance.

The chief executive of Breez is Roy Sheinfeld.  In a statement welcoming Seetee on board, he saluted its vision and said his company’s non-custodial approach would let consumers, merchants, content creators and peers access the lightning network at speed. The Blockstream lightning network access protocol, Greenlight, was unveiled in July. Blockstream’s backers include Li Ka-shing’s Horizons Ventures, Khosla Ventures and Tencent of China.

Bitcoin was originally designed by Satoshi Nakamoto as a payments system that did not rely on third parties for authorisation. Because bitcoin operates outside the world of politicians and their fiat currencies, it became viewed as a safe haven by some family offices. Their view has been well expressed by Røkke: “Like gold, bitcoin has the ability to protect us against politicians who have the power to destroy our monetary base.”

The development of the lighting network takes bitcoin closer to its original purpose as a payment system. PayPal and Visa are among the payment providers who already use bitcoin. Next generation lightning developers include Elizabeth Stark, founder of Lightning Labs, and Jack Mallers of Zap Solutions, who introduced the idea to El Salvador. 

Lightning systems create a “layer two” bitcoin protocol by opening a link between payment participants in an “off-chain” network of user-hosted nodes and channels, just as the internet (or social network) links up third-party data sources to deliver results. A secure foreign exchange transaction can be achieved in milliseconds, potentially making existing services redundant. The final transaction is recorded on the bitcoin blockchain but only when the transaction is complete. Lightning is particularly suited to smaller transactions, using fractions of a bitcoin. Swaps between different blockchains are possible and systems are being developed for other cryptocurrencies. However, larger deals requiring decentralised security would probably continue to use the traditional bitcoin service, for now.

Lightning has been endorsed by Jack Dorsey, CEO of Twitter as well as Square, a financial payments company that has paid $29 billion for Afterpay, which helps clients buy goods, and pay for them later. Dorsey was an early backer to Lightning Labs, as was Vladimir Teven, co-founder of Robinhood. He has tweeted that Twitter and the Lightning Network would work together, one day.  

The lightning network concept was developed by Joseph Poon and Thaddeus Dryda in 2015.  Here’s a link to their research paper. https://lightning.network/lightning-network-paper.pdf

Subscribe

You will need a Premium Plus Subscription to access this database.

Exclusive news, analysis and research on global family enterprise and private investment offices.

Access to the most comprehensive fully interactive database on global family offices, principal investment offices, and family enterprises.

Check Deal Data, Senior Staff, and New Analysis on more than 500 family/principal investment and holding groups

Already have an account? Login

Subscribe

You need at least a Premium Subscription to read this article.

The most comprehensive information service on the global family enterprise world, featuring exclusive news, analysis, research and data on global family enterprises, family offices, and private investment offices.

Premium

£299

per year

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
SUBSCRIBE NOW

Premium+

£399

per year

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

SUBSCRIBE NOW

Already have an account? Login

You've reached the end.

Continue reading free articles by registering as a Member.
Or choose a Premium Plan.

Membership

Free

  • Exclusive reports, analysis and commentary
REGISTER NOW

Premium

£299

per year

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
SUBSCRIBE NOW

Premium+

£399

per year

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

SUBSCRIBE NOW

Already have an account? Login

Leave a Reply