- The Lightning Network capacity reaches a new all-time high.
- The adoption of the protocol slowed after market-wide corrections in November.
- It has allowed for more versatile use of Bitcoin.
Layer 2 protocol Lightning Network has reached a new capacity all-time high. The milestone follows a period of slow growth for the network as the crypto market experienced corrections across the board.
Over 3,400 BTC Locked
Bitcoin’s community is excited as the Layer 2 protocol Lightning Network reaches a new milestone in terms of BTC locked. At over 3,400 BTC, it has a value of over $145 million, locked at current rates on major exchanges.
The Lightning Network was built to tackle scalability issues that have plagued Bitcoin and reduced its suitability for transactions. These issues convinced Elon Musk, who has a background in payments, to reject the idea of Bitcoin as a means of exchange. Musk said, “The transaction value of Bitcoin is low, and the cost per transaction is high. At least at a space level, it is suitable as a store of value. But fundamentally, Bitcoin is not a good substitute for transactional currency.”
Since its launch, the Lightning network has made valiant attempts at solving the scalability issues of the network. Adoption of this new technology spiked in 2021 but slowed down as the crypto market started to crash in November. It is important to note that while this is a notable achievement, the value locked on the network is minuscule compared to the Bitcoin market cap of about $800 billion according to CoinMarketCap, with more BTC being held as wrapped tokens on the Ethereum network than Lightning.
The most recent notable implementation of the technology was about 3 weeks ago on the Cash App. Cash App was built by Jack Dorsey’s Block, formerly Square, and the implementation now allows users to send a minimum of $1 in BTC without necessarily owning the asset. Adoption of the Lightning Network is gaining massive steam in Latin American countries that have been plagued by inflation and have difficulty with remittances.
Lightning Network Facilitating Bitcoin Advances
2021 was an epic year for crypto and Bitcoin. The digital asset saw a 70% value increase by year’s end with massive investor adoption. Bitcoin also became recognized as legal tender in El Salvador and usage increased in Latin America.
It is important to note that the move by El Salvador would not have been possible without the integration of the Lightning Network. The state-owned Chivo wallet is Lightning compatible and makes seamless cross-border payments possible. The Lightning Network also inspired the Bitcoin Beach project. It created the first fully crypto-economy on the coasts of El Salvador in 2019.