The Bitcoin Lightning Network has reached new milestones in its development

For the first time, the Lightning Network – a layer 2 payment product built on top of the Bitcoin blockchain that allows for secure, private, and near-instantaneous transactions at low to no cost – has surpassed 25,000 active nodes, indicating that the network is becoming stronger as more nodes and channels are added.

The number of active nodes has increased by 8% to 25,010 in the last 30 days. A node is a network "user" who configures their computer to communicate with other nodes. They may then transmit, verify, and receive data — in this instance, bitcoins – in this manner.

The Lightning Network does not have a central data server that records all of the transactions or interactions between users since it is a decentralized network. Instead, the data, or at least a portion of it, is tracked by a decentralized network of dispersed nodes.

The Lightning Network enables users to transport transactions via off-chain channels, which helps to decrease congestion on the Bitcoin blockchain. All transactions that travel via a channel are rewritten into a single transaction and settled on the Bitcoin network in a couple of seconds. These channels link the nodes that have opted to join in this manner.

However, not every node uses a channel. Currently, 14,419 nodes have channels, accounting for approximately 58 percent of all nodes. The remaining 42% are just there, at least for the time being.

There is, however, the possibility of earning income for individuals who want to establish and finance a Lightning Network channel.

The Lightning Network's earning yield

Node operators must “fund” a channel with a modest amount of BTC in order to open it. The average financing amount is now about 0.035 BTC. The value of every transaction that may be routed via that channel is equal to whatever amount is in that channel. When a transaction passes via one of their channels, node operators get a modest fee in exchange for providing channel liquidity.

Not every node in the Lightning Network is linked to every other node since it would require much too much storage per node. In order to discover a route to its ultimate destination, a transaction must typically “hop” across channels, from one node to the next. To do so, the Lightning Network employs onion routing, a privacy-focused network secured by encryption that enables a transaction to bounce from node to node until it reaches its destination.

Each hop across a channel is charged separately, thus the fewer the hops, the better. The average hop distance is now 8.8 hops.

According to statistics from 1ml, the number of channels has risen to 65,739 and their capacity has increased by approximately 78 percent, from 1,800 to over 2,300 BTC, since we last reported on July 15.

There are more connections between the nodes as the number of channels increases. Because each node hop incurs a charge, having more channels accessible improves the likelihood of finding a more efficient path to the transaction's ultimate destination. As a result, improved connectivity may significantly decrease the costs of transmitting transactions.

Greater connection and channels also means more competition in terms of transaction facilitation. The average charge is now lower than the basic fee. Despite the fact that the basic cost for traveling through a node's channels is 1 sat, the median fee is just 0.000006 SAT/SAT spent, or $0.000000003018/SAT spent. (A “sat” is a satoshi, bitcoin's smallest unit.)

Furthermore, increased network capacity indicates a better established network since it indicates that users have collectively "invested" in the network. Each channel must be sufficiently financed in order for transactions to hop from node to node. The greater the capacity, the greater the amount of money that can be transferred.

Forces at work

The rise is due in part to the growing demand for a solution to Bitcoin's scalability issue, which says that the base layer can only handle seven transactions per second. Big names in crypto have taken notice of layered networks like Lightning and sidechains like Liquid, including Twitter and Square CEO Jack Dorsey, whose Twitter user name now incorporates a Lightning bolt for the Lightning network.

The Lightning Network made news earlier this summer when Jack Mallers, CEO of payments firm Strike, revealed that bitcoin had been approved as legal currency in El Salvador. Mallers' Lightning-based payment software Strike was deployed throughout the nation in collaboration with El Salvador's president, Nayib Bukele.

Mallers is now taking a hard line against large centralized exchanges like Coinbase by lowering bitcoin buying costs on its app to near nothing. All of these significant actions demonstrate his commitment to promoting Bitcoin's development as well as drawing attention to Strike and Lightning.

Post a Comment