Deep Dive
[1]Current Lightning Network public channel capacity is at 3,539 bitcoin, and it continues to grow over 30% annualized.
Current Lightning Network public channel capacity is at 3,539 bitcoin, and it continues to grow over 30% annualized.
The below is from a recent edition of the Deep Dive, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now[2].
“Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient.” - Hal Finney [3]
In today’s Daily Dive we examine the growth of the Bitcoin Lightning Network. The Lightning Network is a decentralized second-layer scaling solution built on top of the Bitcoin network that allows for cheap payments between counterparties. The Lightning Network can essentially be thought of as a bar tab between counterparties, with the opening and closing of the tab serving as the equivalent of an on-chain bitcoin transaction. The proverbial “bar tab” is constructed using a 2-of-2 multisig wallet, which allows for users to take control of their funds in case of a hostile counterparty.
While today’s Daily Dive won’t go much further into the technical mechanics of the Lightning Network, you can find additional information here. [4]
While the Lighting Network does enable private channels between counterparties, the total balance locked in these channels is not public, which is self-explanatory. Thus, in our analysis we will focus on public channel capacity, but it is important to remember that this is not counting the potentially large channels set up between counterparties that are
