Lightning Network is a Layer 2 protocol on the Bitcoin network that helps scaling the network with fast, cheap, and private transactions. According to data, the capacity of this network has increased 46% in less than a couple of months and it now holds 2200 BTC in its channels as compared to 1500 in June.
Purpose of Bitcoin Lightning Network
The network was designed on the proposal of Joseph Poon and Thaddeus Dryja back in 2015 so that the Bitcoin network’s base layer can be scaled. As Bitcoin relies on a plethora of systems for the network to work properly, which is both costly and has a lot of nuances, this Lightning Network solves the problem by scaling the blocks.
How does the Lightning network work?
It begins with utilizing Bitcoin’s base layer and protocol to abstract small transactions between users away from its blockchain. With Bitcoin having smart contracts, Lightning can shift the final balance of those payments into the base layer while abiding perfectly by the rules.
Hence, the only thing Bitcoin’s base layer has to do is to record the channel-opening or channel-closing transactions. Lightning Network ensures Bitcoin users enjoy seamless and affordable payments by not requiring any transaction fee and not making the users wait like on-chain Bitcoin transactions normally make them do.
Lightning is very fast. It currently has a maximum throughput of 25 million transactions per second which is more than three and a half times when compared to the speed of on-chain transactions which makes the settlements on Lightning Networl way faster than usual.
Beta version getting a faster acceptance
Ever since the Lightning Network was launched as a Beta version back in 2018, the adoption has grown at a higher rate than before. It allows the non-technical users a greater use because of its features which is why it is growing rapidly as Bitcoin gets more and more popular globally.
In April only, the Lightning Network had reached the 10,000 node mark. Now it has seen a 46% growth in its capacity in less than a couple of months.