According to recent research by the analysis arm of Bitcoin margin trading exchange, BitMEX, the use of Lightning Network on Bitcoin (BTC) has been higher than expected. The scaling solution for the world’s most popular digital currency has demonstrated significant growth across various aspects.
BitMEX applied different research methodologies to come up with a report. According to the report, Bitcoin’s off-chain scaling solution continues to rise. BitMEX concluded that the number of non-cooperative closures has grown past 60,000. In addition, around 6,000 BTC has been spent on closure transactions. Lightning Network is a second layer scaling solution that enables the users to transact using Bitcoin at extremely low fees. The report also outlines that it may be a sign of intense experimentation. It reads:
“The volume of transactions here is quite large and may indicate more experimentation with lightning than many expected. The data also indicates non-cooperative closures are more of a common closure type than people think.”
How Lightning Network’s Growth is Crucial for BTC’s Long-term Trend
On the Lightning Network, a channel is the same as opening a tab on a bar. The same way customers can order drinks and beverages throughout the whole session and settle all the payment with a single bill, the users on Lightning Network can initiate several transactions and solely close the channel after all the transactions are complete.
Indeed, the closing of the channel takes place on-chain on Bitcoin’s blockchain grid which is rigid and unchangeable. Due to this, the network enables the settlement of many bitcoin transactions at the same time.
“Our database illustrates that non-cooperative channel closures are relatively common and that lightning network usage is higher than expected,” noted BitMEX.
The latest report by BitMEX Research indicates that the use of the Lightning Network has surpassed expectations over the past year. The uptrend surge in its use is very crucial for Bitcoin’s long-term growth. Unlike Lightning Network, most blockchain networks especially those utilizing a proof-of-work consensus algorithm, the on-chain transaction capacity is limited.
Furthermore, most blockchain networks such as Bitcoin and Ethereum can allow between 6-50 transactions per second. However, transacting beyond that often results in high fees charged. Hence the success in implementation and growth in usage of a second layer solution such as the Lightning Network; are significant for any large-scale blockchain network. The report reads:
“The findings may indicate that experimentation with mobile lightning wallets (which often produce private channels) may be more common than many expected. The data may also indicate that non-cooperative closure types are more common relative to the cooperative closure type, than the community thought.”
Fundamentals to Consider
The rise in the use of a second layer solution is among the several significant fundamentals factors of Bitcoin’s long-term growth. Other important factors include a consistent increase in active developers, large developer activity, and an increase in unique addresses on the Bitcoin network. If these fundamentals continue to improve as the year progresses, it is expected to have a positive effect on the price of Bitcoin.
At the moment, the Lightning network enjoys a volume of about 865 BTC. This is 1% more than it could handle over the past one month. Regardless, the developments in Lightning Network are particularly crucial. They are not only meant to trigger Bitcoin’s mass adoption but settling micro-transactions faster and at scale is important for our daily applications. So far, Lightning Network seems to be on the right track.