Lightning Network, reaching the highest level ever seen in both Bitcoin and US Dollar capacity, marks a significant milestone.
Bitcoin’s Lightning Network Has Reached a Record Level in Terms of Public Network Capacity, Reaching an All-Time High
According to data from The Block, a record capacity of 5,630 BTC was reached on Saturday, surpassing the previous peak of 5,620 BTC on April 18th.
Additionally, the network’s capacity in US Dollars has also surpassed $172 million, reaching an all-time high. Over the past 12 months, the Lightning Network capacity has seen an increase of 42% and 105% in Bitcoin and US Dollar terms, respectively, demonstrating significant momentum alongside increased adoption.
What is Lightning Network?
It is a network designed to provide fast and economical micro-payments. It operates as a second-layer payment protocol built on the Bitcoin blockchain, consisting of bidirectional payment channels. It allows users to make instant payments without relying solely on the main Bitcoin network, which often suffers from slower transaction speeds and higher fees.
Users can open payment channels with each other, enabling off-chain transactions that can be settled on the Bitcoin blockchain at a later time. This way, Lightning Network enables faster and more affordable payments while alleviating scalability issues associated with the Bitcoin blockchain.
Concerns Regarding Lightning Network
Firstly, it does not completely eliminate the cost of Bitcoin transactions. Users may still incur certain costs, such as opening Lightning channels.
Most importantly, the network exposes users to price risks associated with Bitcoin. Specifically, users are required to lock their funds within the Lightning Network, making them susceptible to severe price fluctuations. This volatility in Bitcoin prices can be one of the reasons for the slow growth of the network.
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