While Bitcoin (BTC) has been gaining and continues to gain popularity all the time, more and more transactions are being processed in its ecosystem. Bitcoin’s blockchain is essentially a database that allows network participants to see all previous, recorded transactions. This database is distributed, and every user of the network has a copy of it. This prevents fraud, but unfortunately brings with it a pretty serious problem: Bitcoin’s scalability problem. This is where the Bitcoin Lightning Network, the answer to the network’s scalability problem, comes into play.
What is the Bitcoin Lightning Network?
The idea behind the Bitcoin Lightning Network is that you don’t need to record every single transaction on the blockchain. Instead, Lightning Network adds another layer to the Bitcoin blockchain (BTC) and allows users to create payment channels between any two instances running on that extra layer. These channels can exist for as long as required, and because they are set up between two people, transactions will be almost instantaneous and there will be very low or no fees.
Unlike a transaction directly running on the Bitcoin blockchain, instant transactions are processed off-chain. This happens through a mechanism that allows nodes to keep track of all possible transaction routes.
The Bitcoin Lightning Network provides a simple way to solve the blockchain’s long-standing scalability problem, which could help Bitcoin reach more users.
The current state of the Bitcoin Lightning Network
To begin with, a little history. The idea of the Bitcoin Lightning Network protocol came about in 2015, only to go live as a beta project in 2018. Initially, it didn’t generate much interest. However, something has changed recently.
Based on data collected by Arcane Research, the Bitcoin Lightning Network had a bandwidth of 1040 BTC in early 2021. Since then, there has been an increase in bandwidth by as much as 70%. Currently, it stands at around 1800 BTC, which is a record high. Based on the data, you can see that it took 39 days to increase the bandwidth from 1100 BTC to 1200 BTC, while the increase from 1200 BTC to 1300 BTC took 34 days. This means that there is an exponential growth.
It is presumed that the exponential increase in the use of the Bitcoin Lightning Network may be due to the establishment of Bitcoin as a legal tender in El Salvador, which obviously results in its increased use.
The widespread adoption of the Bitcoin Lightning Network protocol may lead to greater use of Bitcoin (BTC) in everyday life. Using the example of El Salvador, we can see that such a situation is as possible. It is predicted that the use of the BLN protocol will attract new users to this already popular cryptocurrency.