BTC added layer 2 protocol to mitigate scaling challenges, Bitcoin Lightning Network (BLN). The BLN was created to offer better scalability, cheaper transactions and increase the speed of transactions on the Bitcoin network.
Scalability has been a deterrent to mass adoption of many cryptocurrencies. For example, high transaction fees and low speed are some of the challenges found in the Bitcoin network.
After the introduction of BLN, scaling issues remained unresolved due to low capacity, among other shortcomings. Furthermore, the Lightning Network introduced more problems, such as malicious attacks and low routing fees.
Apart from the attacks, the BLN is incompatible with all wallets. Therefore, a compatible wallet must be purchased to work with it.
With other issues, the BLN capacity has struggled and faced much criticism since its introduction in 2018. However, with the ongoing expansion and modification, the BLN capacity reached 4,000 BTC in less than four months.
Bitcoin Lightning Network in its bull market
Recent data shows that the public capacity of the Bitcoin Lightning Network has increased to 5,000 BTC. Increasing BLN’s capacity would allow for faster transactions, more liquidity, and higher transaction volume.
Despite the crypto winter of 2022, which caused so much loss in the crypto market, network upgrades like scaling solutions continue to improve. The growth of scaling solutions reflects their increasing demand and utility.
Messari, a crypto market intelligence platform, recently commented on the challenges of the lightning network. The intelligence platform stated that the Light Network received a lot of sponsorship and prospered last year because it protected itself from the general market downturn. Messari also said that Lightning Networks had stable growth despite the 57% drop in BTC price in recent years.
The report reveals that Lightning channel and node counts increased 24% and 14% year over year, indicating a shift towards a mature financial payment network.
Contributors to the 5,000 BTC push
Another data from Arcane Research said that River Financial and Loop channel capacity expansion by Lightning Labs contributed to the 5,000 BTC boost. Furthermore, the adoption of BTC from El Salvador as a ledger tender, including the integration of Lightning payments from companies such as McDonald’s and Starbuck, was a key milestone for BLN.
Lightning Labs announced the alpha version of the Taro daemon to allow BTC developers to design, receive, and send assets on the Bitcoin blockchain. The first release was Bitcoinizing the dollar, according to Lightning Labs.
Lightning Labs also announced a fundraiser of $70 million in Series B funding in early 2022. Valor Equity Partners led the fundraiser with Baillie Gifford, a global asset manager. The common fund was to boost the network that transacts billions of dollars annually and make it a competitor to Visa and Mastercard.
Additionally, MicroStrategy posted a job in September seeking a full-time Lightning Network Software Engineer. The reason for looking for an LN software engineer is to build a software as a service (SaaS) platform based on LN. Several companies including CashApp, Kraken, BitPay, and Robinhood adopted the Lightning Network in 2022.
Featured image from Pixabay and chart from TradingView.com