The Lightning Network, the second layer solution of the Bitcoin blockchain, continues to expand around the world. While the cryptocurrency market is still weakened, the highly scalable network has just surpassed one of its records: nearly 4,500 bitcoins (BTC) are now deposited in this solution, proof of a continued enthusiasm for the queen of cryptocurrencies.
The new Lightning Network record
Over the past year, cryptocurrency prices have fallen and fundraising in the Web3 sector has drastically reduced. However, in terms of uses, we observe the opposite trend : the number of bitcoins (BTC) blocked on the Lightning Network has only been growing since April 2021, and the end of the bull run has not stopped its growth.
As a reminder, the Lightning Network is a scalability solution built on top of the Bitcoin network. Its main advantage is to make instant bitcoin transactions at infinitely low fees. In addition, this technology is the perfect tool to democratize BTC micropayments.
Between February 2022 and February 2023, no less than 2,000 bitcoins were deposited in this scalability solution, thus representing a 57% increase in the total amount of assets stored on this network. Stagnating around 5,200 BTC since the FTX affair, the Lightning Network took advantage of the recent rise in cryptocurrencies to establish today its new record at 5,490 BTC.
Figure 1 – Evolution of the number of bitcoins deposited on the Lightning Network and their value in dollars between January 2018 and February 2023
On the graph above, note that the valuation of bitcoins on the Lightning Network (in red) did not follow the growth of BTC units deposited (in blue). This is due to the volatility of Bitcoin price : the price of BTC fell violently in 2022, thus causing a fall in the value of the assets blocked on the network despite its growth in terms of capacity.
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An international adoption?
Although the Lightning Network has been in beta since its launch in 2018, the network has accelerated its democratization since the 2021 bull run. One of the triggers was the legalization of Bitcoin as legal tender in El Salvador in September 202. In this Central American country, the large-scale use of the queen of cryptocurrencies has taken place through open channels on the Lightning Network.
In the same way, some companies are using this innovation to facilitate international fund transfers. In areas where banking institutions are difficult to access, the Lightning Network makes it possible to open up financial services to local populations. Since December 2022, companies like Strike and CoinCorner have been enabling the transfer of funds between Western countries (the United States and the EU) to African countries (such as Ghana, Nigeria and Kenya) using the Lightning Network.
Despite its advantages, this network also has its limits : in an interview conducted by Cryptoast, one of the co-creators of the Lightning Network, Thaddeus Dryja, claimed that this technology is currently not able to support the entire world population:
” With the technology we have today, we still can’t have too many people using the Lightning Network. We are therefore limited in the number of people who can open channels. We cannot at this point have a billion people using the Lightning Network. ยป
? Read the full interview with Lightning Network co-creator Thaddeus Dryja
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Source: The Block
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Always enthusiastic about new technologies, I gradually moved closer to Web3-related activities during the year 2021. Over time, I wanted to add my stone to the building. It was then that I became an editor, with the aim of explaining cryptocurrency-related topics to as many people as possible.
Timothy Bourbotte
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