This is why the Bitcoin lightning network is growing exponentially

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The capacity in the Bitcoin lightning network is increasing non-stop. Growing network effects are the background.

While the Bitcoin market is rather bleak due to the macroeconomic situation, the cryptocurrency is moving up a gear elsewhere. We are talking about the Lightning network. As of today (June 7), capacity on the Layer Two network on Bitcoin (BTC) has reached a new all-time high. At 3,970 BTC, liquidity in Bitcoin’s scaling solution has never been higher.

Converted into U.S. dollars (USD), however, capacity now amounts to “only” USD 117 million. This means that dollar liquidity is 45 percent below its all-time high of USD 216 million. The reason is, of course, the rapid price loss on the Bitcoin market. After all, the No. 1 cryptocurrency is currently trading 57 percent below its all-time high at USD 69,000. Also today, Tuesday, BTC has to accept a daily loss of 5.6 percent. Bitcoin is trading at $29,501 by press time.

The all-time high of the Lightning network is a clear indication that the market believes the promises of the scaling solution. This is not a matter of course, as the network has only existed for four years and is technically quite complex.

Network effects provide growth spurt

However, it should also be emphasized that the capacity of the network does not grow linearly, but exponentially – as can be seen in the graphic. This is due to so-called network effects, which cause the value of the network to increase with each new participant.

Recently, there has also been a strong increase in interest from institutional investors. BTC entrepreneur Jack Mallers announced a cooperation with e-commerce giant Shopify at the Bitcoin 2022 Conference in Miami, USA. Accordingly, with the help of Mallers’ company, Shopify will integrate Strike Lightning payments into the point-of-sale system of Shopify customers who want to offer the service.

Picture by Pixabay

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