Bitcoin’s second layer Lightning Network payment protocol has been expanded unnoticed by most of the users. First proposed in 2015 and launched in beta in 2018, its rollout and capacity have accelerated in recent months.
The Lightning Network enables users to send quick and inexpensive transactions through payment channels. In contrast to the Bitcoin-based layer, Lightning transactions are processed “off-chain” via a mechanism called gossip and probing, which allows nodes to follow possible transaction routes.
Arcane Research recently published a report wondering if this Bitcoin-based network will have similar dynamics to the one that was decentrally funded in July 2021, during the “DeFi Summer”. During this time a mania broke out and apparently everyone began to be interested in DeFi dApps.
Data from this research firm shows that the Lightning Network increases capacity from 1,100 to 1,200 in 39 days. Later, from 1,200 to 1,300, it took 34 days, as the following graphic shows.
Source: Arcane Research
Bitcoin’s Lightning Network currently has a capacity of around 1,800 BTC. The expansion phase has been shortened, it took 5 days to rise from 1,700 BTC to the current level of around 60 million US dollars BTC.
In contrast, this metric was 1,040 BTC at the beginning of 2021. Arcane Research has seen a 70% increase in less than six months. In comparison, it took this network three years to go from 0 to 1,000 BTC.
As a result, the number of nodes activated on the network has grown exponentially. That metric comes in at 22,705, but Arcane Research found that only 12,079 are active as payment channels. The previous canals exceeded 55,000. The research company claimed:
The rapid growth could be a result of increased use of the Lightning Network, which has gained greater prominence and demand in recent weeks as the government of El Salvador made Bitcoin legal tender.
Bitcoin Could Jump To Mainstream Adoption Via The Lightning Network?
This factor could be the first step for BTC to reach a wider user base. Bitcoin Beach’s initiative in El Salvador has shown that BTC can be used for an everyday, low-cost use case.
As the former Google employee Michael Levin argues in his article “Lightning Network, Bitcoin’s Crossing the Chasm Superpower”, this payment protocol could drive a new wave of BTC adoption. According to its adoption curve, BTC is in an early adopter phase and needs to bridge the gap between them and an early majority.
Source: Michael Levin
These users tend to be more pragmatic with specific needs that require a solution to meet them. Fast, inexpensive transactions on the Lightning Network could be the perfect use cases for Bitcoin to create a “beachhead” in the mainstream. Levin said:
With the Lightning Network and motivated entrepreneurs, Bitcoin, the network, is unlocking the power of human ingenuity and optionality in its race for the gap.
At the time of writing, BTC is trading at $ 32,409 with a loss of 1.4 on the daily chart. Bitcoin is currently facing high selling pressure and could see further downward moves unless the bulls take a decisive step.
BTC is trending down on the daily chart. Source: BTCUSD Tradingview
Bitcoin was rejected in the high area around its current levels and downward trends on the daily chart. At...