The Bitcoin Lightning Network recently hit a major milestone after reaching a new all-time high. The layer 2 payment system for Bitcoin now has more than 3400 Bitcoin locked.
Lightning Network Hits ATH
The adoption of Lightning Network has grown significantly over the past year. Lightning Network is an off-chain protocol that allows users on the Bitcoin network to transact at near-zero fees.
Lightning Network seeks to bring scalability to the Bitcoin network. Users lock BTC on the network and later use the locked amount to make smaller off-chain transactions. The value of the locked Bitcoin on the Lightning Network now stands at around $141 million.
Over the past year, the utilization of the Bitcoin network has increased. This growth has coincided with gains in BTC’s value, as it registered a bullish rally attributed to growing adoption by investors and large institutions. Bitcoin’s price peaked in November, but it was followed by a slump shortly after.
The market crash over the past few weeks has affected the growth of Lightning, whose total market capacity is significantly low compared to that of Bitcoin’s nearly $800 billion. Furthermore, wrapped Bitcoin has a higher transaction volume than the Lightning network, whose market cap stands at $10 billion. (Wrapped Bitcoin is used for transactions on the Ethereum blockchain.)
While Lightning is growing, it has not been devoid of issues. The network is still failing to effectively eliminate the cost of Bitcoin transactions. Users have to pay to create the on-chain Lightning channel, requiring them to lock coins, which exposes users to market volatility. These limitations could be behind the slow growth of the network.
Dorsey is Supporting Lightning’s Growth
Jack Dorsey, the CEO of Block, has been boosting the adoption of Bitcoin. Dorsey has advocated for people to embrace Bitcoin due to its open-source software and transparency. Recently, Block integrated Lightning Network into CashApp through its Open-source Lightning Development Kit. This integration has allowed users on the platform to access zero-fee Bitcoin payments.