The Lightning Network [LN] is a secondary layer payment protocol that operates atop a blockchain. Due to its fast transaction processing between nodes, it is hoped that this will be a viable solution to the scalability problem of Bitcoin. This peer-to-peer system works via a mesh network of bidirectional payment channels without actually transferring the custody of funds. The network works by opening a payment channel, working on the transaction without broadcasting to the blockchain and then closing the payment channel by broadcasting only the finalized version of the transaction to distribute the funds. From its humble beginnings, in January 2018, LN has grown from strength to strength and has now reached a capacity of 460 BTC and over 15,000 channels.
Impressive Growth Trajectory.
LN has been certainly making waves, with the “experiment” showing plenty of promise and achieving exciting milestones, in its still nascent development cycle. Just this November, the network capacity exceeded $2 million and in terms of BTC, the capacity has already hit 460 BTC. As mentioned before, It has now grown to over 15000 channels and has more than 4000 nodes.
Being To Becoming
For a project launched earlier this year, in January, this is mightly impressive. Blockstream had launched it on MainNet with just 50 nodes and at its inception, it had a capacity of a meager 4 BTC. However, from there on, the gains made has impressed everyone. The current capacity rise has made many take note, with some calculating a 10,000% growth rate, since its inception. It is also worth noting the rapid expansion tat LN saw in November. Open channels grew at a steady pace, much in line with its growth the months prior. Capacity, on the other hand, was a different story, as it more than quadrupled in a month. In early November, it was 120 BTC and at the time of writing this, the capacity had grown to 460 BTC.
All these numbers are thanks, mainly, due to a massive increase in use. There has been a lot of support from the community and the wider industry to adopt the technology. For example, last month, more than 4000 merchants on Coingate added LN support. There is also a lot of discussion about its usage for instant micropayments. All this makes for exciting chatter, especially when one is reminded that this is still an experiment which is still in its testing phase. There are always risks and concerns, the biggest being that the network might expand too quickly before it has a chance to be properly tested for robustness.
Regular news update on the ever-expanding Lightning Network is good news, making Bitcoin more viable with each iteration. It is important to understand the challenges that lie before the industry. Despite the market situation, as long as such growth trajectories are maintained, it bodes well for the industry as a whole.