Bitcoin’s new milestone in the underrated Lightning Network

According to statistics from the 1ML website, the number of bitcoins locked by the Bitcoin Lightning Network has exceeded 5,000 (currently 5015.23), worth about $93.66 million. In addition, the current Lightning Network node data is 17700 and the number of channels is 85983.

Bitcoin's new milestone in the underrated Lightning Network

As Bitcoin’s efforts to become a global payment network, the Lightning Network, although the attention of the Lightning Network has become increasingly low in the past two years, has indeed been expanding day by day, and the capacity of 5,000 bitcoins is also a new milestone.

01 The Lightning
Network: Bitcoin’s “payment” intention

It is necessary to review the original intention of the Lightning Network at that time, as the earliest implementation of Layer2 technology in the crypto world, its core mission is to promote the vision of bitcoin’s “global payment”.

Since 17 years, with the continuous rise in the price of bitcoin and the sharp increase in usage, limited by the block capacity, the 10-minute block mechanism and the design of the packaged transaction, the handling fee has risen all the way, and the single fee at the highest time is even as high as hundreds of dollars, which is more and more out of the heart of “global payment”, and the contradiction begins to intensify.

It was also from then on that Bitcoin was no longer used as a “currency”, but more as a commodity and gold analogy. This also leads to a controversial topic that has been flipped several times: Is Bitcoin a little more “global payment” or a little more “digital gold”?

The unprecedented pace of institutional entry in 2020 has made the market almost default to the value proposition of Bitcoin’s “digital gold”. (Of course, now it seems that the entire crypto market has become a small follower in the eyes of the Fed and the US stock market.)

For Bitcoin, which can only process 7 transactions per second, how to achieve instant payment in a small, high-frequency, and fast retail scenario, and how to make it possible to buy a bottle of mineral water and order a cup of coffee with bitcoin have once become the biggest pain points of its “global payment” vision.

Many attempts have been made, including the Lightning Network, a path that has been controversial since the beginning – that is, the promotion of Bitcoin’s payment scene, which has become an important mission of Bitcoin Layer 2, that is, the Lightning Network.

So starting from the beta in March 2018, the Lightning Network officially landed, aiming to put transactions outside the main chain of Bitcoin, allowing users to transfer bitcoins at lower fees and higher efficiency

Outside the main chain, the Lightning Network allows payment channels to be opened between nodes, and all payment channels remain active until either party voluntarily leaves the channel to close it, which can theoretically support millions of transactions per second, transaction time in milliseconds, and transaction fees are extremely low, enough to support small, high-frequency retail scene payments.

This makes it economically feasible to buy a bottle of mineral water with Bitcoin (of course, it is also because of this that the current single amount is too large will greatly reduce the success rate), which is naturally born to solve the problem of small and fast payments in Bitcoin.

02 The twists and turns of the Lightning

However, due to many technical controversies such as security and the cognitive inertia of the market, progress is relatively slow, technology has always been more than technology, as one of the most powerful companies in the blockchain world, Blockstream has a solution inextricably linked, and the Lightning Network has always carried multiple confrontations:

In the “scaling battle” that once involved Bitcoin’s top priorities, the Core faction represented by Blockstream supports SegWit + Lightning Network, and does not support scaling; The “big block faction” represented by Wu Jihan supports expansion + isolation at the same time, which also makes the Lightning Network once the focus of battlefield attacks.

After the number of bitcoins locked in by the Lightning Network reached 1,000 in mid-2019, the increase in the second half of 2019 and the whole of 2020 was almost stagnant.

The recovery did not begin until after entering 2021, and by June 2021, the number of bitcoins locked up had increased by 42% compared to the beginning of 2021, exceeding 1500, and then soaring by about 2500 in the following year – as of June this year, the capacity of the Bitcoin Lightning Network exceeded 4000 bitcoins.

Now, three months later, another 1,000 have grown, the fastest growth in history.

In general, for ordinary users, the technical principles of the Lightning Network can actually be used as a technical black box. After all, there is actually a public discussion in the industry, and the current Lightning Network only recommends micropayment:

First, large payments are easier to exhaust channel funds than small payments;

Second, the current scale of the Lightning Network is not large, there are some problems in security and ease of use, and there may be some unknown risks.

Today, when the Lightning Network is not yet mature, it is recommended to try to avoid storing large amounts of money on the channel. So it is foreseeable that although the Lightning Network has begun to make gratifying breakthroughs in its own scale and support audiences such as exchanges, it is still full of unknowns for a larger and farther future.

After all, for Bitcoin, which has been running spontaneously for more than ten years without a large-scale security incident, the Lightning Network, which has only been on the ground for four years, still seems immature, and it takes time and the market to react slowly.

Spark visible in 2022

From a certain point of view, for the development and landing progress of the lightning network that has been in a slow climbing state for many years, this year’s Kraken blessing and capital-intensive entry action have made the spark of the lightning network gradually ignited.

In particular, this year, the blessing of some unexpected head exchanges and institutional giants has begun to increase significantly, becoming a strong endorsement of their safety and universal recognition.

One of the most straightforward is the Bitcoin 2022 conference in April this year, where the stock and crypto asset trading platform Robinhood said at the Bitcoin 2022 conference that Robinhood’s crypto asset wallet will support the Bitcoin Lightning Network.

The crypto exchange Kraken has also supported the Bitcoin Lightning Network and is open to all users, as well as the $70 million Series B financing completed by Bitcoin Lightning Labs, the development team of the Bitcoin Lightning Network, which will also launch a stablecoin protocol Taro based on the Bitcoin Lightning Network.

In addition, Alyse Killeen’s venture capital firm Stillmark plans to raise $500 million for a new fund, the Stillmark Credit Fund, focused on supporting investments in the Bitcoin Lightning Network infrastructure.

In addition, Lightning Network-related investment and financing events are also increasing:

In April, Strike said at the Bitcoin 2022 conference that it had partnered with Shopify, payment provider Blackhawk Network, and point-of-sale supplier NCR to build a new payment system that allows merchants to quickly receive payments in U.S. dollars after customers pay with crypto assets.

In April, Impervious, a Lightning Network-based peer-to-peer network infrastructure, announced the completion of a seed round of funding for an undisclosed amount;

In May, Mexican bitcoin exchange Tauros integrated into the Lightning Network;

In May, Lightspark, a Bitcoin Lightning network company founded by David Marcus, head of Meta crypto assets, completed a round of funding with an undisclosed amount;

In June, Mash, a payment platform based on Bitcoin and the Lightning Network, announced the completion of a $6 million seed funding round;

Most notable is the beta version of Taro v0.1.0 released last month by Bitcoin Lightning Labs, which will allow Bitcoin developers to create, send, and receive assets on Bitcoin.

In the coming months, Taro will reportedly add more enhancements, including Universes, to allow users and asset issuers to provide proof of asset origin, supply offerings, and more easily interact with Taro asset data, which will be introduced to the Lightning Network once on-chain functionality is complete.

This means that Bitcoin’s asset attributes in Layer 2 of the Lightning Network will also be slowly highlighted, so as to generate value support for other derivative assets as a core asset, such as issuing stablecoins, etc., and transfer through the Lightning Network, which will undoubtedly be a new positioning, and even a wave of Bitcoin DeFi boom based on the Lightning Network.

04 Summary

It remains to be seen what role the Lightning Network, which is in the end of Qingping, the lightning network that is struggling to move forward in the controversy, and the efforts made in micropayments, can play in the wild hopes of Bitcoin’s “global payment”.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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