If you’ve been following our social media, you’d have seen our optimism about the development of the Bitcoin Lightning network. Back in June, we released an article summarising the functionality and the current state of Lightning, but the progress in volume and technology since has been nothing short of remarkable. Amongst all the ongoing drama in Bitcoin Cash, and a general bear market in crypto, Lightning has started to pickup major momentum in its capacity to handle transaction volume. Note the increase in density in the visualisations below, representing both increasing numbers of payment channels and increasing numbers of Lightning nodes.
As explored in our previous article, the success of the Lightning network largely relies on the network effects generated by a high volumes of payment nodes and channels. Over the last few months, both the total capacity of Lightning payment channels and the number of Lightning nodes has been increasing at an exponential pace. Back in June, the Lightning mainnet only had a total payment capacity of 24 BTC. That figure has since multiplied by nearly 20, as the current capacity sits at just under 460 BTC. This is an incredibly bullish indicator for the potential success of lightning, as there is still a huge UX barrier to the provision of Lightning nodes and thus Lightning payments. The requirements for running a Lightning node are still relatively complex to manage. A fully operational bitcoin node is needed, with an additional Lightning node needing to run on top of that.
For our Lightning node — shown in the graphic above, the process was (and still is) relatively clunky from a UX perspective, as we must maintain the health of the bitcoin node but also manage channels and payments through solely a VM instance console. Even for technically literate participants, this is still not the most pleasant experience — errors are common and documentation is sparse.
Obviously the network needs to move beyond Linux consoles to something more user friendly to the average participant, but to see the growth levels that have happened even with this interface is simply remarkable. We expect to see further development of Lightning infrastructure as the release of out of the box hardware solutions becomes more common.
Casa’s node solution has been incredibly popular in its short lifespan, being a plug and play Lightning node (full disclosure — we have ordered one ourselves and will have content around it). There are two major benefits of these solutions, the first being that users do not have to endure the difficult setup process of both bitcoin and Lightning — something which no doubt discouraged many from getting involved. The second benefit is the major UX improvement of the management of node functionality. The transition from the Linux command line system shown above to a more traditional, more user friendly menu like the Casa menu shown below makes the Lightning experience magnitudes better.
It’s also important to recognise that Lightning’s infrastructure has grown even without a considerable number of applications built on its technical framework. One of the few functional applications right now is the Satoshi Spin system we demonstrated in a past article. Typically protocols have been the limiting factor on cryptocurrency applications (see Ethereum and Bitcoin apps), but the Lightning infrastructure is expanding at a pace where it should be able to comfortably handle the application load in the near term.
We will continue to monitor the progress of Lightning over the next few months, as we believe it is the major part of the future of Bitcoin. Expect to see some content from us around Lightning payments relatively soon.