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- Bitcoin Lightning Network growth rate has slowed by in comparison to the previous year
- Although the growth rate has slowed down, the public channel capacity is still growing by 30% annually
- 30-day growth chart shows a peak annualized growth rate of nearly 348% in August last year
Bitcoin Lightning Network is a side chain that helps the blockchain to process faster transactions for cheaper fees. Since the network has been integrated with the BTC blockchain, many have embraced it. In the current scenario, the capacity of the sidechain is at 3,539 BTC. According to some reports, it has been noted that the network’s capacity is continuously growing by more than 30% annually.
Is Bitcoin Lightning Network beneficial?
It is observed that the BTC blockchain cannot scale to have every single financial transaction in the world to be broadcast to everyone. Hence, there has always been a requirement for a secondary level of payment systems that are lighter weight and more efficient.
Indeed, Bitcoin Lightning Network is a decentralized Layer-2 scaling solution built on top of the BTC blockchain. The side chain is helping the network to allow cheaper payments between third parties.
Essentially the side chain could be thought of like a bar tab among counterparties, with the opening and closing of the tab serving as the equivalent of an on-chain BTC transaction. Notably, such bar tabs are constructed using a 2-of-2 multi-sig wallet that allows users to take control of their funds in case of a hostile counterparty.
Growth of the BTC side chain?
Although the Bitcoin Lightning Network does allow private channels between counterparties, the total balance locked in these channels is not public. Hence, if we analyze the network while focusing on the public channel capacity, we can observe that the current public channel capacity is 3,539 BTC. However, it is considered that the way of analysis is not counting the potentially significant channels set up between private counterparties.
However, while noting the 30-day growth rate, the relentless growth of the network was highest in 2021 over the past couple of years, with the 30-day growth reaching a peak annualized growth rate of nearly 348% in August last year.
However, since then, the growth rate has slowed down. But if we average the growth over the past 30-days, we can say that although the capacity has slowed down, it is still growing by more than 30% annually.
