The capacity of the Lightning Network has increased by 68 percent in the last 30 days. Irek Zielinski, a software developer and Bitcoin researcher, announced that the total number of micropayment channels in the Lightning Network has increased from 23 to 38.6 Bitcoin, an average increase of 2.2 percent per day.
Meaning of Layer 2 Scaling
In December 2017, when Bitcoin’s price was close to $20,000 after a new all-time high and the crypto currency market reached $850 billion, Bitcoin’s transaction fee exceeded $10 on average and reached $30 on large transactions.
Since July 2018 it has cost less than $0.1 for widespread crypto-wallets such as Blockchain.info. 48,000 bitcoins were recently moved for 4 cents fees. The low transaction fee is due to the relatively low transaction volume of the Bitcoin network but also to the implementation of Segwit.
Eight months ago, the Bitcoin network processed 500,000 transactions a day, but recently the network has processed less than 150,000 transactions a day. As you can also see from the daily transactions chart of Blockchain.com.
As Bitcoin’s price rises in the coming months, experts such as BitMEX CEO Arthur Hayes ($50,000 per BTC) predict, Bitcoin’s transaction fee will rise at the same time. This is particularly the case when demand for bitcoin increases during a strong rally.
Scaling solution – second layer like Lightning
Second layer scaling solutions such as the Lightning Network are able to efficiently process small transactions without burdening the main chain or the main bitcoin network. Plasma by Ethereum works similar to Lightning and is also by the same author.
Most large blockchain projects and developers focus on improving layer 2 solutions to ensure that public blockchain networks will be able to manage small and large on- and off-chain networks in the next bull market, even with high demand and high daily volumes.
The growth of the Lightning Network from 23 BTC to 38.6 BTC may seem like a slight improvement in capacity, considering that only $120,000 worth of bitcoin was added to the Lightning payment channels last month. Since Lightning micropayment channels typically process payments in the range of $0.1 to $10, an increase of 15.6 bitcoin can be seen as significant progress in a short time.
Progress equals adoption
As with any other technology in its infancy, experts have expressed concern about Lightning and the network’s ability to guarantee larger payments. Diar, a digital currency analysis company, wrote in a study entitled Lightning Strikes, But Select Hubs Dominate Network Funds:
“But while capacity and the number of nodes and channels are constantly increasing, the reliability of the successful forwarding of a payment in the Lightning Network is still quite low, especially for larger amounts. The success rate for a payment for no more than a few dollars between random LN nodes is 70 percent.
Jeff Garzik, former Bitcoin Core developer and co-founder of Bloq, a blockchain software company, also found that a single person became the largest node operator on the Lightning Network by opening multiple channels worth $50,000.
Garzik raised a problem, suggesting that in the current development phase a few channels have an essential part of the Lightning Network’s resources.
With steady growth, these problems can be solved by the open source community of Bitcoin developers. But the danger of centralization is one of the biggest criticisms of the Bitcoin Lightning Network.