This year’s Kraken blessing and capital-intensive entry have caused the Lightning Network’s spark to gradually start a prairie fire for its development and execution, which have been slowly progressing for many years.
(Background supplement: Over the past year, the capacity of the Bitcoin Lightning Network has expanded by almost 100%, reaching almost 4,750 BTC.)
It is necessary to go back and look at the Lightning Network’s initial goals at that point. Its main goal is to advance the ongoing realization of the concept of Bitcoin’s “global payment” as the first Layer 2 technological practice in the encryption world.
The block capacity, 10-minute block generation method, and packaged transaction design have all been limiting factors since 2017, and the handling charge has increased significantly, with the highest single handling fee recorded since that year. The contradiction started to get more and more out of the “global payment” of the initial goal, even going up to hundreds of dollars.
Since then, everyone now uses Bitcoin more as a commodity and a gold analogue rather than as a “currency.” This brings up another point of discussion: Is Bitcoin more of a “global payment” characteristic or more of a “digital gold” attribute?
The market is on the verge of accepting the value proposition of Bitcoin’s “digital gold” due to the historically rapid rate of institutional participation in 2020. (Of course, looking at the Fed and the U.S. stock market now, it appears that the entire crypto market has devolved into a meek follower.)
How to implement instant payment in small, high-frequency, and quick retail scenarios—making it possible to buy a bottle of mineral water and order a cup of coffee with Bitcoin—was once the biggest pain point of its “global payment” vision for Bitcoin, which can only process 7 transactions per second.
Many initiatives have been made as a result, such as the Lightning Network, a path that has generated controversy from the start and which gave rise to Bitcoin Layer 2, commonly known as Lightning. crucial purpose of the internet.
In order to move transactions away from the Bitcoin main chain and enable users to withdraw and transfer Bitcoin with cheaper costs and greater efficiency, the Lightning Network was formally released in March 2018 after starting as a beta version:
The Lightning Network, which can support millions of transactions per second with transaction times measured in milliseconds, enables payment channels to be formed between nodes outside the main chain. Payment channels remain operational until any participant willingly quits the channel to close it. The transaction charge is incredibly tiny and allows for small, frequent retail payments.
This enables use cases like buying a bottle of water with Bitcoin to become economically viable once more (of course, as a result, the success rate of a single transaction at the moment will be substantially reduced). This naturally addresses the issue of the speedy payment of small sums in Bitcoin.
However, growth is comparatively sluggish and technology has always been more than just technology because of numerous technological disputes, including security and the market’s cognitive stagnation. Blockstream is closely related to solutions as one of the most influential businesses in the blockchain industry. Multiple exchanges have always been supported by the Lightning Network:
The “Big Block faction” represented by Wu Jihan supported capacity growth + isolation while the “Core faction” represented by Blockstream backed capacity expansion + isolation in the “scaling fight” that was once a key priority for Bitcoin. Additionally, this once again made the Lightning Network the center of attention on the battlefield.
The increase in the second half of 2019 and the entirety of 2020 nearly came to a halt once the quantity of Bitcoins locked in the Lightning Network surpassed 1,000 in mid-2019.
It took until 2021 for it to begin to recover. When compared to the start of 2021, the number of bitcoins locked in June 2021 climbed by 42%, surpassing 1,500, and then increased by around 2,500 the following year. As of June current year, the capacity of the Bitcoin Lightning Network exceeds 4,000 bitcoins.
After three months, another 1,000 pieces have been added, breaking the previous record for fastest growth.
The technical underpinnings of the Lightning Network can generally be used as a technical “black box” by common users. After all, there are open conversations taking place in the sector. Lightning Network now only advises micropayments:
The Lightning Network is currently not vast in scale, there are certain issues with security and usability, and there may be some undiscovered concerns. First, large-value payments are more likely to deplete channel funds than small-value payments.
Since the Lightning Network has only been operational for four years, it is still in its infancy, and it takes time for the market to react for Bitcoin, which has been operating spontaneously for more than ten years without significant security incidents, to grow.
From a specific vantage point, this year’s Kraken blessing and capital-intensive entry into the game have caused the Lightning Network’s potential to start igniting. The Lightning Network has been slowly growing for many years.
The Bitcoin 2022 conference in April of this year featured one of the most direct exchanges. At the Bitcoin 2022 conference, Robinhood, a stock and encrypted asset trading platform, announced that its encrypted asset wallet will support the Bitcoin Lightning Network.
Along with the $70 million Series B financing completed by the Bitcoin Lightning Network development team Lightning Labs, which will also launch a stable based on the Bitcoin Lightning Network, the cryptocurrency exchange Kraken has also supported the Bitcoin Lightning Network and is accessible to all users. Taro, coin protocol
Additionally, Alyse Killeen’s venture capital company Stillmark intends to raise $500 million for a brand-new fund called the “Stillmark Credit Fund” that will encourage investments in the Lightning Network infrastructure for Bitcoin.
In order for Bitcoin to be used as a core asset to generate value support for other derivative assets, such as the issuance of stable coins, etc., and transfer through the Lightning Network, which is undoubtedly advantageous, the asset properties of Bitcoin in Layer 2 of the Lightning Network will also gradually become more noticeable. New positioning and even a Bitcoin DeFi explosion based on the Lightning Network will result from this.
The Lightning Network, which was striving to advance in the dispute and its efforts in micropayment, what role can it play in the vision of Bitcoin’s “global payment”? The strong wind began at the conclusion of Qingping. Wait and see, please.