Lightning Network grows as Bitcoin rises

With bitcoin’s value rising again, the adoption of the Lightning Network is also on the rise. The Lightning Network is a second layer on top of the Bitcoin blockchain, that enables private payment channels to be established between users. The Lightning Network has experienced continued growth at an increasing rate, in the number of nodes, the number of channels, and network capacity over the past several months. For the first time, the Lightning Network has exceeded 25,000 active nodes, indicating that the network is becoming more powerful. Since July, the number of channels has increased to 65,323 and expanded their capacity by roughly 78%, from 1,800 to over 2,379 BTC, based on data from 1ml.

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Today, Bitcoin is seen by retail investors and financial institutions as a store of value. However, bitcoin can do much more than that. On top of Bitcoin, Lightning Network is a second-layer solution built on top of bitcoin that makes it possible to transact faster and cheaper.

Lightning enables users to open payment channels between two or multiple parties. Users on the Lightning Network can set up nodes, that send payments via the quickest routes between parties. A node operator gets a small fee for each transaction. Transactions are much faster, as parties can transact with each other without everything having to be approved by nodes.

The adoption of the Lightning Network is accelerating rapidly, with the number of active nodes doubling in the last year. Kraken was one of the first exchanges to add Lightning support, but Strike is the company that brought Lightning Network to the mainstream. Strike is now available in El Salvador, with EU adoption planned soon.

International remittance is a multibillion-dollar business, but processing costs restrict how much money individuals can transfer. Due to increased transaction fees with traditional remittance providers, bitcoin and Lightning Network offer a quicker and cheaper way for people to send money. El Salvador could become the biggest user base Lightning Network, easily processing thousands or hundreds of thousands of transactions instantly. The use of Lightning Network in El Salvador represents a huge test and will serve as a catalyst for other remittance-dependent countries to adopt bitcoin and Lightning Network.

But Lightning Network will also help people around the world realize what bitcoin can do as a network, not just an asset, and actually transact with it.

Lightning could help change the internet’s ad-driven model and serve as the de facto payment method to access services and resources on the web. A week ago, Substack announced that its 500,000 paying subscribers will now be able to pay using bitcoin using the Lightning Network. This is a very significant step for content creators. In the future, we may be able to send micropayments to read individual stories, instead of subscribing to a publication. There have also been talks that Twitter may integrate Lightning payments to tip the users for useful information.

Lightning messaging protocols could offer more private and foolproof encrypted communications, free from censorship or centralized control. Joost Jagers, a Dutch developer, has been working on a messaging application called Whatsat. This messaging app is completely built on top of the Lightning Network and allows people to transfer messages. These messages are end-to-end encrypted. Sphinx is another example of a chat app that uses the payment rails of Lightning to send text messages,

From an investment standpoint, Lightning Network has the potential to transform bitcoin, and investors can earn a lot of money. As this technology becomes widely used, people who invest in bitcoin today may realize substantial profits over time as bitcoin finds more use cases and becomes more valuable.

Although the Lightning Network has experienced growth and development since its inception, challenges remain. “Watchtowers”, a much-anticipated next step for securing the network, will be released in the next version of the Lightning Network to fight fraud. When someone uses Lightning, it’s necessary to remain online to make sure their counterparty isn’t trying to steal those funds. The watchtower “watches” for old states to be broadcast, so if a bad actor tries to broadcast an old transaction, to give themselves extra money, the watchtower responds by punishing that bad actor.

Obviously, we are still talking about a technology that is under development, but with the potential to revolutionize not only how we send money, but also that of content, messaging, and much more.

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