The Bitcoin Lightning Network achieves another milestone with public capacity reaching an all-time high of over 3,900 Bitcoin.
The Bitcoin community now has more than 3900 BTC in the layer 2 payment system. This is equivalent to about $141 million.
Lightning Network adoption continues to increase dramatically. The revolutionary network brings BTC payments with near-zero fees.
During the same period, Bitcoin’s use was widely as a value transfer network and store of value by investors, businesses, and users as the Bitcoin price surged.
Despite the rapid growth, the total capacity of the Lightning Network remains still small compared to the $790 billion market capitalization of Bitcoin.
How does the Lightning Network work?
The Lightning Network is an off-chain network that allows users to make bitcoin payments with near-zero fees. It was launched in 2018 to solve bitcoin’s scalability constraints.
Lightning does this by allowing users to lock a certain amount of Bitcoin into the Network by opening a Lightning channel. The lightning channel is connected to other nodes in the lightning network and allows for instant and low-fee transfers.
Once the channel closes, a single on-chain transaction settles the final balance. The result is significantly lower fees and less congestion on the bitcoin base layer.
However, there are some problems with the network. First, it does not completely eliminate the cost of Bitcoin transactions, and still charges users a fee to open a Lightning channel. Also, operating a lightning node requires technical skill and cannot easily be setup by the average user.
Bitcoin and Lightning
In January, the Bitcoin focused US company Cash App integrated the Lightning Network, bringing commission-free Bitcoin payments to the app. This integration was made possible by Cash App’s parent company Block and its open source Lightning development kit.
Block (formerly Square) is the parent company of Cash App. On Tuesday, Block CEO Jack Dorsey reaffirmed its commitment to open source software and open protocols like Bitcoin.
Lightning is still in its infancy but on a steep growth curve
The Layer 2 solution for the Bitcoin network just reached an all-time high in network capacity, number of nodes and channels. It has experienced parabolic growth since the beginning of 2021. Currently, there are 3,925 BTC locked into the Lightning network.