With the valuation of bitcoin picking up once again, adoption of the Lightning Network, a second layer protocol built on the Bitcoin blockchain and a radical solution to Bitcoin’s scaling limitations, is surging as well.
The Lightning Network sits as a second layer on top of the Bitcoin blockchain, enabling private payment channels to be established between parties. The final bitcoin balance of these channels is only confirmed on the underlying Bitcoin blockchain when they are closed, so beforehand, payments can be sent back and forth nearly instantaneously, without the usual fees incurred when transacting on the Bitcoin blockchain base layer. This is seen as a method for enabling cheaper and faster payments, while still ultimately retaining the security and trustlessness of base layer Bitcoin.
The Lightning Network has been growing for years now, lauded for its ability to cut transaction times down and reduce fees. But actions in the last several months have brought it even further toward the spotlight. For instance, Jack Mallers, CEO of Lightning-focused company Strike, partnered with the government of El Salvador to announce its plans to make bitcoin a legal currency in that country. Since this proclamation in June, the rollout has been proceeding smoothly. International press has been in a tizzy due to the boldness of the Salvadoran government, and Mallers himself has seen widespread new investment in his business.
Since those events this summer, fortunes have been rising for the Lightning Network all across the board. In the period of approximately two months after this announcement, the network’s overall capacity grew by some 46%. Adding about 1,500 bitcoins to the entire system, and about 15,000 new nodes to carry out transactions, the capacity of the Lightning Network has risen to meet a wide variety of possible stress tests that have not yet occurred.
The improvements to this Bitcoin infrastructure have not been completely one-sided, however. Later in August, for example, Business Insider claimed in a report that upgrades like these to the Lightning Network have been instrumental in Bitcoin’s practical adoption by a wide number of businesses and individuals. Although much of the interest in bitcoin over the years has been focused on its worth as a speculative asset, with less care for the possibilities that its underlying technology holds, many of the more practical applications of Bitcoin have only been made possible through the Lightning Network. This report quoted a statement from a team member of digital asset manager CoinShares, who claimed that “Lightning is much more secure than Visa, and could do more transactions than Visa.”
On August 11, Mallers announced that another major update was coming to the Lightning Network, run directly through Strike’s popular app: direct acquisitions of bitcoin. Claiming that he wanted to “get rid of the waitlist and start the race to the bottom, once and for all,” he has set up a convenient way to acquire and personally hold bitcoin more easily than any competitors. Although many of the different “easiest” methods to acquire bitcoin are predicated on a lack of self-custody, and the actual assets being held in a wallet completely operated by a private exchange and not its users, Strike will combine a speedy turnaround time with real custody to create an optimal customer experience.
In short, the Lightning Network has come very far in the last several months, and seems poised to only go up from here. A novel way to solve some of the most pressing practical issues for Bitcoin, the Lightning Network is proving to the world that its own vision and craftsmanship can change the entire Bitcoin ecosystem. When more businesses start accepting bitcoin in daily life, the infrastructure provided by the Lightning Net Source The Bitcoin Lightning Network Sees Massive Growth, International Adoption | Nasdaqwork will be crucial in making this dream a reality.