By Landon Manning
Even as Bitcoin has entered a bear period of stagnant prices, its popular Layer 2 protocol known as the Lightning Network is seeing record levels of usage, alongside a wide array of new investments.
Since a dip in bitcoin prices in June 2022, the exchange rate of the currency has remained relatively stable near the $20,000 mark. Although this price mark is still higher than the highest spike in the world of pre-COVID bitcoin, the cryptocurrency has certainly entered a bear period compared to the highs of 2021-2022. Yet, despite some of these setbacks, one of the most popular Bitcoin applications is seeing more success than ever.
The Lightning Network is a decentralized Layer 2 protocol built on top of the Bitcoin network. Relying on a peer-to-peer network of users, the Lightning Network allows members to make near-instant bitcoin microtransactions which get bundled together to settle on the main Bitcoin blockchain. It is one solution to the scalability problem in Bitcoin, where transactions take on average 10 minutes to complete. This doesn’t work for everyday payments, which is where the Lightning Network comes in. Even as the price of bitcoin is entering a lull, new data published in October 2022 is showing that the Lightning Network’s usage and capacity is shooting up without any sign of stopping.
This growth is not only measured by the number of active users or the capacity of the network, but also by the fact that many different firms are investing huge amounts of capital into Lightning’s future. Take, for example, Jack Mallers’ company, Strike, which has been building and operating an easy-to-use wallet based on the Lightning Network for years. Mallers announced in late September that Strike had raised some $80 million in a recent wave of funding. The company has an ambitious goal to meaningfully break up the dominance of credit card companies like Visa and Mastercard for everyday transactions. Planning a series of high-profile corporate partnerships to integrate the Lightning Network, Mallers has also claimed that the payments experience for both users and vendors will be streamlined dramatically.
This massive initiative is not the only one in its vein to be carried out, either. The Vietnamese-Canadian startup NeutronPay announced a raise of $2.5 million to build Lightning infrastructure in Vietnam to disrupt legacy finance’s stranglehold on payment options all across Southeast Asia. Although this seems like a very ambitious goal, it’s hardly the first one in this vein: On October 12, CoinCorner partnered with the government of El Salvador to launch a Lightning-based physical “tap-to-pay” card in the country. Services like this show that the possibility for the Lightning Network to replace credit cards is more than a pipe dream; it is practical, possible and even currently being carried out on a small scale.
It is not only these sorts of projects that have been getting the attention of investors. New York Digital Investments Group (NYDIG), for example, has begun hosting a Lightning Accelerator Project this fall. Intending to foster the presence of a strong community of Lightning developers, NYDIG’s project will provide transportation, lodging, workspaces, mentorship and more to a wide variety of developers from all over the world. This project will create cohorts of developer teams to be able to collaborate in an 8-12 week program, providing resources to ensure that industry talent can be polished to the highest degree. Initiatives like this represent the more nurturing aspect of the flourishing Lightning Network, helping dedicated individuals transform their abilities into innovations at a breakneck pace.
In short, the investment in and development of the Lightning Network are high at the moment. Far from the constant claims that this new bear market spells the doom of Bitcoin, all the interest in the Lightning Network shows that there is a large number of people already focused on improving Bitcoin years into the future. With big and small investment initiatives and increasing interest in development, it seems that one thing is clear: Thousands of determined and energetic people are ready to push Bitcoin and the Lightning Network toward a brighter future.
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