Following an exponential increase in capacity over the course of 2022, the Bitcoin (BTC) Lightning Network had a poor start to the new year. According to Arcane Research, growth in Lightning Network capacity, or the number of BTC locked up in channels, has decreased.
In 2021, the Lightning Network grew from 1,000 to 3,000 BTC in just eight months, reaching the 3,000 BTC mark in mid-October. While the network continues to reach new highs, growth is decreasing. The entire amount of BTC locked up in the network is reaching 3,500 BTC, sparking controversy and discussion on social media.
To review, the Lightning Network is one answer to the scalability issues that have impacted the Bitcoin system. Lightning enables quick and extremely low-cost off-chain transactions. However, it needs Bitcoin to be locked up in payment channels spread across lightning nodes.
In 2021, Lightning Network activity increased, owing mostly to El Salvador’s onboarding of an entire country and Twitter’s integration of Bitcoin Lightning tipping. In research conducted in October, Arcane Research forecasted 700 million Lightning Network users by 2030.
In the future, lightning may strike again for the second layer of the Bitcoin solution. A variety of upgrades and announcements, such as the American mobile payment provider Cash App, which rolled out Lightning Network connectivity to its approximately 30 million customers, may drive future growth.
Arcane Research’s research confirms with CoinCorner that the Lightning Network may be entering a new development phase, with the best yet to come.