When The Block last covered Sparkswap, the bitcoin startup had just raised a $3.5 million seed round to build a non-custodial cryptocurrency exchange on the Bitcoin Lightning Network using Atomic Swaps. Today, Sparkswap is announcing support for the U.S. dollar—enabling users to buy bitcoins directly from their Sparkswap Lightning wallet.
"We’ve long wanted to support BTC and USD as a trading pair since it’s the most important and popular trading pair. We decided to build it the way we did in order to make it accessible to a much larger group of people who currently lack a convenient option for buying Bitcoin without giving up custody," Trey Griffith, founder of Sparkswap tells The Block.
The new feature works as follows:
- A user downloads Sparkswap's desktop app
- The user connects the app to their LND Lightning Network node
- The user completes Sparkswap's KYC process
- To initiate a bitcoin purchase, the user transfers USD via ACH to Sparkswap's payment partner
- The user's USD is kept in a third-party escrow account as the trade is being carried out
- Once the USD hits the escrow account, Sparkswap initiates a transaction, sending bitcoins over the Lightning Network to the user's account
Unlike its bitcoin and litecoin trading pairs, Sparkswap will act as the counterparty for trades dealing with bitcoin and USD. At launch, USD support will be available in 21 U.S. states. Bitcoin to USD sell orders will not be supported with the initial launch.
“This product delivers on the promise of Bitcoin as a self-sovereign currency while still delivering a convenient user experience by building on the Lightning Network,” said Brett Gibson, a partner at Initialized Capital.