The Lightning Network, Bitcoin’s layer 2 scaling solution for fast and cheap bitcoin payments, now houses over 3,000 BTC in its more than 77,000 channels, according to data from TXStats.com. The network’s bitcoin capacity has more than doubled since June when it crossed the 1,500 BTC milestone.
Fueled by a growing awareness after El Salvador enacted the Bitcoin legal tender law, Lightning has been seeing a steep increase in activity in terms of channel number and bitcoin capacity. The number of BTC being held in Lightning channels has nearly tripled since the beginning of the year.
Lightning is a decentralized scaling solution built on top of the Bitcoin blockchain — hence the “layer 2” or “second-layer” naming — thereby making small and frequent transactions economically viable for users. The power of the Lightning Network lies in its ability to abide by the same rules as Bitcoin transactions while making payments cheap and quick.
A Lightning channel is created with a multi signature address in the network in which the two parties each hold a key, requiring both keys for moving funds. This scheme enables the two users in the channel to transact while preventing one user from stealing funds from the other.
Although improvements need to be made, Lightning is a powerful technology that enables Bitcoin to scale, debunking common but fallacious arguments from mainstream media. More importantly, Lightning makes it economically viable for human rights activists and citizens of developing countries to transact value daily in the best form of money humanity has ever known — bitcoin.