Bitcoin’s Lightning Network (LN) recently reached an all-time high capacity of 5,000 Bitcoin, marking a significant milestone for the network, according to a February 22nd report.
This neutral protocol built on top of Bitcoin has been gaining traction in emerging markets like South America and Africa, largely due to the efforts of the LN mobile payment application Strike.
Bitcoin’s LN: Encouraging Growth Despite Lower Liquidity
The rise of Bitcoin’s Lightning Network (LN) capacity and the decline in the amount of Ethereum locked-in smart contracts signal positive developments for LN development. Despite having a fraction of Ethereum’s liquidity in DeFi contracts, Bitcoin’s LN capacity has been consistently rising.
However, the number of channels on the peer-to-peer network dropped significantly in November following the collapse of FTX. This was likely due to miners operating LN nodes leaving to run mining clients, as per the report.
Nonetheless, as Bitcoin-based applications like NFTs continue to gain popularity, the end of LN channel capitulation may be in sight. More than 2k new channels have been added to the network since the beginning of 2023, indicating a growing interest in LN adoption.
Furthermore, according to Valkyrie Investments’ report, LN adoption is picking up speed in emerging markets like South America and Africa due to the efforts of the mobile payment application Strike.
The company launched an LN-based remittance service in Africa in the last month of 2022, offering no-cost transfers from the US to Africans in Nigeria, Ghana, and Kenya.
Strike has also introduced dollar payments using LN, making it an attractive alternative to traditional remittance channels that can cost up to $45 per transaction.
In addition to Strike, the launch of Nostr, an open protocol enabling global, decentralized, censorship-resistant social media, is driving LN adoption. Damus, a Twitter competitor built on Nostr, has integrated various LN wallets and has over 600,000 users signed up.
Although the Lightning Network does not have a native token, there is potential for LN nodes to earn fees for facilitating transactions and providing liquidity.
As such, the Lightning Network is well-positioned to become the leading global payment network, as predicted by prominent personalities in the crypto space.
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