The second part in an article series by Ivan Makedonski from Breez on how Lightning’s instant settlement finality can be a disruptive force fundamentally changing how different industries are organized.
The adoption of instant settlement with split payments in the logistics industry has the potential to revolutionize various aspects of the delivery ecosystem. Currently, the logistics industry faces challenges related to payment processes, third-party risks, and issues within the workforce. Let’s explore the transformative effects of this new system:
- Reduced Transaction Costs: The most immediate benefit is the significant reduction in transaction costs. The Lightning Network fees, around 0.3%, are a drastic improvement compared to the current system’s fees of 4.5%-9%. This cost reduction benefits all entities involved in the logistics chain.
- Elimination of Third-Party Risks: Instant split payments eliminate the risks associated with multiple third parties. Each entity, including the buyer, receives their payment simultaneously, reducing the complexity and risks associated with delayed payments and potential financial issues within the chain.
- Incentive Transformation for Delivery Workers: With instant split payments, delivery workers are no longer compensated solely for their time but actively engaged in each payment related to their deliveries. This shift from time-based compensation to performance-based payment fosters a fairer and more efficient payment structure. Delivery personnel can be compensated for their specific contributions, eliminating the need for aggressive delivery targets.
- Encouraging Personal Vehicle Use: Delivery workers are incentivized to use their own vehicles, as this results in a more substantial share of the payment for each delivery. This promotes a sense of ownership and responsibility among delivery personnel, contributing to a more efficient and cost-effective system.
- Decentralization of Delivery Companies: The introduction of instant settlement with split payments opens the door for a decentralized delivery ecosystem. This shift allows for the participation of numerous small entities and individuals in the delivery process, moving away from reliance on a few large delivery companies.
- Decentralization of Income for Delivery Personnel: Delivery individuals can participate in each delivery payment, earning money directly proportional to their contributions. This decentralizes their income, offering a more flexible and dynamic earning model.
- Decentralization of Options for Buyers: Buyers will have a broader range of options for who delivers their products. The decentralized delivery ecosystem enables them to choose from various delivery providers, including independent agents and smaller delivery companies.
- Community-Oriented Delivery System: The decentralized and more flexible nature of this system allows for community-oriented delivery. Individuals can integrate delivery tasks into their existing plans, creating opportunities for neighbors to deliver packages to each other. This fosters a sense of community and social bonding.
- Optimized Routes on an Individual Basis: Individuals with their own vehicles are no longer bound to a single delivery company. They can work for various companies in their local area, optimizing routes on an individual basis. This flexibility benefits both the delivery personnel and the overall efficiency of the system.
- Potential for Entrepreneurship: The decentralized nature of the system opens up opportunities for entrepreneurship in the logistics sector. Anyone with a vehicle can become a convenient and flexible delivery person, contributing to a more diverse and competitive market.
In conclusion, the introduction of instant settlement with split payments has the potential to transform the logistics industry, making it more efficient, adaptable, and user-centric. The decentralized nature of this system creates opportunities for innovation and community engagement, marking a significant step forward in reimagining the logistics ecosystem.