<blockquote>
<p>How does existing lightning payment service were able to manage to provide merchant's BTC in form of fiat</p>
</blockquote>
<p>It doesn't.</p>
<p>Hedging currencies is something that must be performed outside the Lightning or Bitcoin networks.</p>
<p>Exchanging currencies is something that must be performed outside the Lightning or Bitcoin networks.</p>
<p>Some commercial businesses might offer to provide such hedging and/or exchange services but that is separate from Bitcoin and Lightning.</p>
<p>I expect businesses or individuals who are worried about exchange rate fluctuations will often choose to recalculate the prices they offer at very short intervals (e.g. daily, hourly?) and often will immediately exchange received currency they consider uncomfortably volatile for another they consider more stable. Those who are extremely concerned about a specific currency will perhaps choose to transfer all the risk to the other party by insisting on a transactional currency they are comfortable with.</p>

CC BY-SA 4.0
2022-09-03T16:07:43.207Z
How can we performing hedging separately, because how can we short Lightning Channel's BTC. We can't take that BTC out of channel and then Hedge that BTC right when channel is not closed?
Arjun Reddy
CC BY-SA 4.0
2022-09-03T16:09:18.900Z
hedging: *"Hedging is accomplished by purchasing an offsetting currency exposure. For example, if a company has a liability to deliver 1 million euros in six months, it can hedge this risk by entering into a contract to purchase 1 million euros on the same date, so that it can buy and sell in the same currency on the same date."*
RedGrittyBrick
CC BY-SA 4.0
2022-09-03T20:52:51.297Z
Let's say I am Lightning payment service, I want to instantly convert BTC to receiver's fiat currency. So, I want to hedge  sender & receiver's channel BTC where transaction happened, How can I hedge the channel's BTC which is present in lightning channel without closing channel?
Arjun Reddy
CC BY-SA 4.0
2022-09-03T16:05:16.013Z
2022-09-03T16:17:05.003Z
2022-09-03T16:17:05.003Z
RedGrittyBrick
<p>Let's say A merchant is using lightning payment service to accept BTC as payment for his shop. How does existing lightning payment service were able to manage to provide merchant's BTC in form of fiat considering BTC price volatility rate , because at the end of the day merchant needs fiat currency to spend his daily living.</p>

<wallet><lightning-network><payment><price-volatility>
How does Lightning payment service Works?
Arjun Reddy
# How does Lightning payment service Works?

(Asked by: username_0 on 2022-09-03)

Let's say A merchant is using lightning payment service to accept BTC as payment for his shop. How does existing lightning payment service were able to manage to provide merchant's BTC in form of fiat considering BTC price volatility rate , because at the end of the day merchant needs fiat currency to spend his daily living.

**Tags:** wallet, lightning-network, payment, price-volatility


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## 1 answers

### Answer by username_1 on 2022-09-03. Score: 2

> How does existing lightning payment service were able to manage to provide merchant's BTC in form of fiat

It doesn't.

Hedging currencies is something that must be performed outside the Lightning or Bitcoin networks.

Exchanging currencies is something that must be performed outside the Lightning or Bitcoin networks.

Some commercial businesses might offer to provide such hedging and/or exchange services but that is separate from Bitcoin and Lightning.

I expect businesses or individuals who are worried about exchange rate fluctuations will often choose to recalculate the prices they offer at very short intervals (e.g. daily, hourly?) and often will immediately exchange received currency they consider uncomfortably volatile for another they consider more stable. Those who are extremely concerned about a specific currency will perhaps choose to transfer all the risk to the other party by insisting on a transactional currency they are comfortable with.

> **Comments:**
> **username_0**: How can we performing hedging separately, because how can we short Lightning Channel's BTC. We can't take that BTC out of channel and then Hedge that BTC right when channel is not closed?  
> **username_1**: hedging: *"Hedging is accomplished by purchasing an offsetting currency exposure. For example, if a company has a liability to deliver 1 million euros in six months, it can hedge this risk by entering into a contract to purchase 1 million euros on the same date, so that it can buy and sell in the same currency on the same date."*  
> **username_0**: Let's say I am Lightning payment service, I want to instantly convert BTC to receiver's fiat currency. So, I want to hedge  sender & receiver's channel BTC where transaction happened, How can I hedge the channel's BTC which is present in lightning channel without closing channel?  

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