The total amount locked in the Lightning Network has tripled since last year to $1.3 billion, despite bitcoin crossing into territory below $40,000.
The number of bitcoins blocked on the Lightning Network (LN) has tripled from 1089 BTC in 2021 to 3479 BTC, according to DeFi Pulse. Blocked bitcoins are currently valued at $1.3 billion.
The catalyst behind the triple increase in total blocked bitcoins is the ability of LN to enable fast and cheap transactions on the Bitcoin network.
The Lightning Network allows for off-chain transactions on the second layer of the Bitcoin network. Two nodes on the Lightning Network can transact on a channel, deferring settlement of the transaction to the main bitcoin network. Off-chain transactions that happen frequently and involve small amounts promote the scalability and utility of the Bitcoin network.
The Lightning Network could catalyze the rise in bitcoin's daily utility as its capacity increases and more people adopt it to transact in BTC.
Why the rise in nodes?
Twitter launched Tips last year, with integration with Strike. Strike allows for fee-free international bitcoin remittances and transactions. Miami Mayor Francis Suarez has recently started accepting his bitcoin payments via Strike, while El Salvador's adoption of bitcoin as legal tender also contributes to the rise of Lightning Nodes.
Strike's partnership with the government of El Salvador increased the network's capacity by 46% two months after the partnership was announced. This added 15,000 new nodes to LN and added 1,500 bitcoins.
Strike launched limited payments functionality in Argentina on January 12, 2022. CashApp Payment Provider announced in late January that it would roll out LN to include more than 30 million customers in the US and UK. The Lightning Network has deftly responded to the increase in nodes, which bodes well for its future scalability prospects.
Bullish sentiment driving the Lightning Network's popularity
The Lightning Network's growth could also indicate potential bull sentiment about bitcoin's price rally despite the downtrend from its all-time high of around $69,000 in November 2021.
Arjun Kharpal, co-founder of the Huobi Scholarship, he thinks Bitcoin may experience another bull run in 2024.
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