Lightning Network, which was introduced earlier in 2018 to solve Bitcoin’s scalability problem, seems to be growing leaps and bound in spite of the crypto’s prolonged bear markets.
Data from monitoring resource BitcoinVisuals shows that network capacity recovered from a recent dip and added 10 percent in the past thirty days, bringing its totals to a record 500.6 BTC on December 24.
Statistics also show that the total number of active nodes on the Lightning Network has crossed 14,000, with a massive uptick of open channels on the main network, while the monetary value of its capacity has ballooned to more than $2 million.
The chart below shows that the network’s capacity was less than ten bitcoins eight months ago, revealing the extent of the Lightning Network’s growth in recent months. The total number of active nodes has also experienced an overwhelming increase since it originally debuted in January 2018, when it had only 29 active nodes on its network.
To experience the difference, look at the following chart.
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How does it work?
The Lightning Network was first proposed by Thaddeus Dryja and Joseph Poon three years ago to create a layer on top of the original blockchain, in order to increase transaction speed while significantly reduce costs.
The official website explains: “This is similar to how one makes many legal contracts with others, but one does not go to court every time a contract is made.”
Or as Charlie Lee, creator of Litecoin, put it: “Fiat is to gold as Lightning Network is to Bitcoin.”
In order to use the network, users have to download the ‘SegWit’ upgrade, which re-organizes data in such a way that blocks can hold many more transactions. And when sending a Lightning payment, two parties deposit the funds at one bitcoin address, a so-called channel, where transactions can be settled before being added to the underlying blockchain.