The Lightning Network gained significant traction in 2021 as over two million Salvadorans boarded the bitcoin train. As the Lightning-based Strike portfolio embarks on a global rollout, it is anticipated that even more nodes will be added.
The Bitcoin Lightning Network, built on the bitcoin mainnet, saw an increase in nodes of 23,13%, or 3534, between September 3 and December 3, 2021. As of May 2021, the number of channels hovered around 40.000 and showed a parabolic increase since then.
The total capacity of BTC in the Lightning Node channels on December 3 was 3233.5 BTC, with 514 BTC added to the channels in September 2021. According to the data, the increase in the channel's capacity is significant for bitcoin to become a medium of exchange. quotation in real time).
What is the Lightning Network and how does it work?
The Lightning network was initially the idea of Joseph Poon and Thaddeus Dryja, co-author of a draft white paper in 2015. A Lightning node is a piece of software connected to the main bitcoin network on level one and Lightning on level 2.
Nodes have payment channels, where transfers of funds are reflected without publishing the transaction on the chain. Lightning nodes only verify the transactions they are directly involved in. Having multiple nodes improves transaction throughput across multiple channels.
The Lightning Network solves some of the frustrations associated with the bitcoin mainnet, such as low transaction speeds (10 minutes per transaction) and high costs. In theory, the Lightning network is capable of making millions of transactions per second, far surpassing traditional payment networks.
Growth model
The Lightning Network has gone through two periods of significant growth. An experimental phase occurred shortly after the mainnet launch between June 2018 and May 2019, with slow user adoption between late 2019 and 2020. During this time, developers worked hard to improve the network.
A huge node entered the network, contributing 50% of bitcoin's capacity in 2018. Another node, called LNBIG, joined the network in November 2018 but didn't create as many nuances as the big starting node. The first phase of growth continued in January 2019, when a Twitter user started a peer-to-peer payment chain called "The Lightning Torch," which included former Twitter CEO Jack Dorsey and co-founder of LinkedIn Reid Hoffman. The chain is believed to have contributed substantially to the capacity of the network.
The second phase of growth came in 2021 with the mass adoption of El Salvador and the introduction of the Strike portfolio in Twitter Tips in the United States and El Salvador. A recently released report by Arcane Research quotes Elizabeth Stark, CEO of Lightning Labs, as saying that "immense opportunities" for the network lie in emerging markets.
