Data reveals that the network capacity on the Bitcoin Lightning Network has jumped to over 500 BTC.
One of the reasons that mainstream adoption of Bitcoin has been slow is due to the inability of the blockchain network to scale up to handle thousands of transactions per second. As a result, the system witnessed massive congestion late last year with transaction confirmation taking days and the transaction fee going up to $30 for just a $100 transfer.
The Bitcoin network can process 7-10 transactions per second compared to Visa’s ability to handle over 1,700 transactions per second.
Lightning Network, a solution to address the scaling issue, was launched in January this year. According to new data, the network has grown despite the existing bearish market conditions.
What Does the Data Reveal?
The data from BitcoinVisuals, an online monitoring platform, shows that the network capacity (the cumulative Bitcoin capacity across all channels) of the Lightning Network crossed 500 BTC on December 24th. At the time of writing, the reported capacity stands at 504.321 BTC, which equates to more than $2 million.
Another interesting statistic that points to the growth of the network is the number of nodes. The total number of active nodes on the Lightning Network has grown to 2,157 nodes with channels. The number of unique channels has increased to 14,662 as of December 26th.
The network capacity, it is reported, was less than 10 bitcoins eight months back. The number of active nodes in January stood at only 29. These numbers suggest the extent to which the Lightning Network has grown throughout the last 12 months.
How Does Lightning Network Work?
The Lightning Network resolves the scaling issue by creating an additional layer over the main Bitcoin network. This transactional layer consists of payment channels. Two entities that wish to execute multiple transactions between themselves can deposit a certain amount in a Lightning Network multi-signature wallet.
These parties can continue to transfer payments to each other if they wish. Details of these transactions are stored on the Lightning Network ledger and signed off by both parties. When any one of the entities wants to close the channel, the remaining funds are credited back to their respective wallets.
Only the opening of the channel and the closing transaction (with balances) is recorded onto the Bitcoin blockchain.
With the implementation of the Lightning Network, throughput is expected to increase considerably. The transaction fee and transfers times will also reduce. And data shows that the adoption of the Lightning Network solution has been gaining traction. This bodes well for the long-term viability of Bitcoin as a medium for the exchange of value.
What are your thoughts on the growth of the Lightning Network? Let us know in the comments below.
Images courtesy of Pixabay.