As Bitcoin adoption increases, so does the capacity of the Lightning Network.
🌍 One of the most important factors of a global crypto adoption is Bitcoin grassroot adoption, which takes into account individuals who use Bitcoin as a means to send money, to pay for a merchandise or to invest their savings. The very reason Bitcoin was created was to offer ordinary people an alternative to fiat, and even if Bitcoin has since become a hot asset diversifying financial organizations’ investment portfolios, ultimately it is the real use that counts.
🧑🏽🤝🧑🏽 Grassroot adoption can be followed by analysing the quantity of small-size transactions or the trading volume of peer-to-peer trading platforms like Paxful or Local Bitcoin (the fact that both platforms have registered Sub-Saharan Africa’s volume doubling in 2021 can tell a lot). There’s another indicator though – the increasing popularity of Lightning Network, a layer-2 solution built on Bitcoin.
Lightning Network ⚡ is a payment protocol consisting of numerous channels that anyone can open, provided that they lock a certain amount of BTC to serve as a guarantee. It can be visualized as a multitude of ledgers opened between every two channels in the network, where value is transferred from one to another until it reaches the intended recipient. The good thing is that it does not need to be broadcasted to Bitcoin blockchain, which allows for almost immediate and very cheap transfers, and this is why so many people now casually use Lightning Network, making it another indicator of a grassroot adoption.
This week marks a significant milestone reached by the Lightning Network – its capacity (i.e. the quantity of locked Bitcoin) has now hit 4’000 BTC, doubling in just one year.
Bitcoin adoption is very much susceptible to the network effect: the more people use it, the more are inclined to, giving it more real value with every transaction. Lightning is a tool that is helping the network effect to kick in sooner.