The bitcoin lightning network is seeing an upsurge in growth having already expanded its capacity by roughly 78% from 1, 800 to over 2, 300 BTC in just 2 months.
The network has also more than doubled its bitcoin capacity in one year, currently with over 65,700 open channels.
The network’s capacity has seen a 46% increase in less than two months – by June 2021, it was housing about 1,500 BTC.
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SEE ALSO: 80% of Bitcoin Trade Namibia On/Off-Ramp Volumes Are Now via The Lightning Network as of April 2021
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Some of the reasons behind the networks recent upsurge, according to Ryan Gentry, Business Development Lead at Lightining Network, include:
- The network has become more accessible
- People are understanding the network’s purpose better, also its potential
- Sustainable volume growth across the board has led to large influxes of capital to / from popular nodes
- The platform is increasingly being adopted for remittances
In a blog post, Levin has indicated that the network intends to scale bitcoin beyond early adopters, to 1 billion people.
In doing so, Lightning Network is trying to be an avenue to scale use cases that draw more people into the bitcoin network.
These use cases include:
- International remittances
- Gaming and metaverse
- VPN
- Card rewards
- Creator economy
A Case for the Lightning Network
Much of the potential for crypto growth has been hindered by the limitations that are inherent in layer 1 networks such as Bitcoin and Ethereum.
Most blockchain networks are preoccupied with providing security and decentralization which are essential for developers who wish to build on top of these protocols.
Ethereum founder, Vitalik Buterin, has described what he calls the Scalability Trilemma – you can’t optimize for security, decentralization, and scalability all at once. You can only optimize for two of these properties.
The solution to this problem has often come in the form of separate chains that are swifter and able to handle more transactions while delegating different degrees of security or decentralization to a layer 1 chain.
These include the likes of Polygon and Arbitrum for the Ethereum network.
The Lightning network was designed to scale the Bitcoin network’s base layer.
It utilizes Bitcoin’s base layer and protocol to abstract small transactions between users away from the Bitcoin blockchain.
With smart contracts, Lightning can settle the final balance of those payments into the base layer while ensuring that all transactions abide by the rules of the protocol.
According to Micahel Levin, Product Growth Lead at Lightning Labs, the network is based on a technology called payment channels. Payment channels allow for any two Bitcoin users to open up a channel with a defined amount of Bitcoin between themselves.
Within a payment channel, these two users can exchange instant, nearly free payments with each other as long as the amount of Bitcoin in the channel meets their bi-directional payment needs.
The Lightning Network takes this technology and builds a network of payment channels in a fully decentralized, permissionless way. That network of payment channels allows for anyone on the network to pay someone else on the network in an instant, cheap way, even if they don’t have a direct channel between them.
By not requiring the transaction fees or wait times that on-chain bitcoin transactions typically do, Lightning enables its users to enjoy affordable, fast, and private payments.
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RECOMMENDED READING: The Bitcoin Lightning Network Trust Chain Torch Arrives in Kenya After Nigeria, Namibia and Ghana
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