Bitcoin has taken a step closer to becoming a daily use currency, as a network that’s designed to facilitate mainstream transactions has doubled in size.
The Lightning Network’s primary goal is to transform bitcoin into a mainstream payment form and currency. The network now has more than 10,000 nodes, meaning that it has doubled in size over the past year. The substantial upsizing is due to the fact that a number of major cryptocurrency exchanges and payment apps have taken up and adopted its technology.
The Bitcoin “Scalability Problem”
Bitcoin has grown rapidly in popularity since it first appeared in 2009, with mainstream financial experts and figures now finally even acknowledging and even endorsing its presence in the financial mainstream.
Despite this rise in popularity, bitcoin still faces what has become known as a ‘scalability problem’ among experts. The underlying blockchain upon which bitcoin operates remains limited, meaning that while bitcoin has become an exciting (if volatile) investment, it is somewhat inefficient as an actual daily currency in practice.
As the bitcoin network grows, it becomes slower, heavier and less efficient. The result is that small, every day transactions are currently not sustainable. For example, right now, the cost of using bitcoin for a small casual purchase, such as buying a coffee or a beer, would incur a fee that exceeds the value of the purchase itself.
Is Lightning Network the Solution?
The bitcoin scalability problem isn’t new, and many solutions have been proposed and tested in the past, including the creation of bitcoin cash – which is a whole separate currency.
Bitcoin itself remains the most high profile and recognizable cryptocoin though, which is why the Lightning Network is currently being backed by leading figures and organizations within the financial industry. If cryptocurrencies in general are to break into the daily lives of the masses, then it’s in everyone’s interest to make sure the most high profile coin works for the purposes of mainstream payments.
How the Lightning Network Works
The Lightning Network operates by redirecting bitcoin payments through a peer-to-peer platform that has been created atop of the bitcoin blockchain. As a result, the strain is reduced to the main bitcoin network. This decreases the processing time from minutes or hours to milliseconds, thus eliminating any fees at all.
Who Has Adopted it Thus Far?
Kraken, CoinCorner, and OKCoin have all adopted the Lightning Network over the past year and integrated it into their platforms, as have a number of other well known crypto exchanges. Going further back, BitFinex was one of the earliest adopters of the network, using it to facilitate instant deposit and withdrawals on its system.
The Next Steps for Bitcoin
So far, the high profile adopters of the Lightning Network have largely been crypto exchanges. If the network is ultimately to fulfill its goal of facilitating bitcoin’s use in our daily lives, then the next step is to have one or more major payment apps integrating it.