Author | Wheatstones Compiler | Huo Huo Producer | Vernacular Blockchain (ID: hellobtc)
Recently, due to the popularity of Bitcoin ecosystem NFTs, BRC-20, etc., the Bitcoin network has become increasingly congested. Leading platforms have begun to support Lightning Network withdrawals. In addition, the Lightning Network protocol OmniBOLT tweeted that it plans to support the circulation of BRC-20 on the Lightning Network, which will help achieve faster and more efficient transactions and unlock new possibilities for BRC-20.
The development of the Bitcoin ecosystem has forced the leading platforms to adopt the Lightning Network. So what is the Lightning Network, which was once hailed as one of Bitcoin's "killer weapons" to solve scalability and other problems? What has it experienced so far? What is its current status?
01 What is Lightning Network
The Lightning Network is a Layer 2 scaling solution for Bitcoin that aims to promote Bitcoin efficiency and lower gas fees. It has come a long way since its inception in 2015, gaining widespread adoption over the past few years. In 2023, the Lightning Network continues to grow in adoption and development. Many businesses and individual users are now using the Lightning Network to process Bitcoin transfers, and the number of Lightning Network nodes and channels has been steadily increasing.
02 Overview of the development history of Lightning Network
Summary of past developments of the Lightning Network, source: valkyrieinvest.com
The Lightning Network has experienced significant growth and widespread adoption over the past few years, and the Lightning Network has been able to significantly expand its capacity.
Currently, there are more than 5,400 bitcoins locked in the Lightning Network. The Bitcoin capacity in the Lightning Network refers to the total amount of Bitcoin that can be transferred through the network at any given time. However, the total capacity is not fixed and continues to expand as more nodes join the network. A comprehensive analysis of the expansion of the Lightning Network and its current capacity can further shed light on the amazing progress that the Lightning Network has made so far: 1. The first Lightning Network payment in April 2018 (the Lightning Network capacity is almost 0) On December 28, 2017, Alex Bosworth announced on Twitter that he had successfully completed the first Lightning Network payment on the Bitcoin mainnet, sharing a screenshot showing that he paid 0.00127 BTC to recharge his Swedish mobile phone package.
The order was for an online purchase at Bitrefill, a platform that allows users to buy mobile credit and gift cards with Bitcoin. The transaction is significant because it demonstrates the first real use case of the Lightning Network being used for fast and low-cost Bitcoin payments in the real world; it also shows that the Lightning Network is capable of processing real-world payments and has the potential to scale Bitcoin to handle larger volumes of payments.
2. August 2018: User-friendly Lightning Wallet (Lightning Network Capacity: 1 BTC)
WoS, Eclair, Zap, Bluewallet wallet logos, source network
Lightning-enabled wallets then became available for mobile devices, making it easier for users to access the Lightning Network. Some of the Lightning-enabled wallets available for mobile devices include:
- Eclair Wallet — Developed by French Bitcoin technology company ACINQ, it is available for Android devices.
- Zap Wallet – Developed by Jack Mallers, it is available for Android and iOS devices.
- BlueWallet — Developed by BlueWallet Services, for Android and iOS devices.
- Satoshi Wallet – Created by the creator of Living Room of Satoshi (Satoshi is an Australian company specializing in payment solutions for Bitcoin) non-custodial Bitcoin Lightning Network wallet that allows users to send and receive Bitcoin payments using the Lightning Network.
These wallets allow users to send and receive Bitcoin via the Lightning Network, making transfers faster and cheaper than on the Bitcoin mainnet. Since then, many other Lightning-enabled wallets have been developed and made available for mobile devices.
3. Lightning Torch in January 2019 (Lightning Network Capacity: 107 BTC)
In early 2019, an anonymous Twitter user launched a novel promotional campaign for the Lightning Network. Dubbed the Lightning Torch, the initiative was designed to demonstrate the capabilities of the Lightning Network by relaying small payments between trusted individuals.
This game-like approach led to greater visibility for the Lightning Network. The Lightning Torch eventually found its way to crypto industry luminaries such as Twitter CEO Jack Dorsey, Litecoin founder Charlie Lee, Lightning Labs CEO Elizabeth Stark, and Binance CEO “CZ”, among others.
The Lightning Torch project effectively demonstrated the potential of the Lightning Network to facilitate small payments and promote trust between individuals in a decentralized manner.
This creative outreach also helps to raise awareness and interest in the Lightning Network, thereby increasing adoption of the technology.
4. March 2019 to December 2020 Steady growth (Lightning Network capacity: 800 BTC)
Lightning Network wallet and platform, source: opennode.com
In the second half of 2020, as users and merchants opened many new payment channels, more and more companies and users adopted the Lightning Network due to its convenient, efficient and low-cost services.
Several global leading platforms have also been connected to the Lightning Network, allowing their users to deposit and withdraw funds using Lightning Network channels, thereby promoting the popularization of the Lightning Network.
By December 2020, the number of Lightning Network nodes reached more than 8,000, and the number of open channels exceeded 29,000, setting a record high.
In addition to the growth of payment channels, the Lightning Network has also launched various new wallet implementations such as Phoenix, Breez, and Muun. These new wallets provide users with a more user-friendly experience through the Lightning Network technology.
Additionally, Lightning Network adoption among merchants has also made great strides during this period. Bitrefill, a crypto gift card retailer, and OpenNode, a payment processor that enables merchants to accept Bitcoin payments online, are notable examples of merchants beginning to accept Bitcoin payments via the Lightning Network.
E-commerce platform Shopify has also partnered with OpenNode to enable Lightning Network payments for its more than 500,000 merchants, further driving adoption of Lightning as a payment option.
5. 2020–2022: El Salvador, cross-border payments, major retailers (Lightning Network capacity: 5,000 BTC)
-El Salvador
Source: pymnts.com
In September 2021, El Salvador became the first country to adopt Bitcoin as legal tender, requiring domestic businesses to accept the crypto asset. Within four months of this landmark decision, the country successfully onboarded 4 million users to its government-backed Bitcoin wallet. This has led to a series of developments and collaborations, demonstrating the growing adoption and application of Bitcoin and the Lightning Network.
In response to El Salvador's adoption of Bitcoin, leading digital payments platform Strike has launched a Bitcoin Lightning payment app in the country, supporting the near-instant, low-fee Lightning Network, Strike provides a user-friendly experience for settlements. All complex cryptography is handled seamlessly in the background, balances are displayed in fiat currency, and deposits/withdrawals are zero-fee via linked bank accounts. Bitcoin adoption in El Salvador is showing promising results, with the Central Reserve Bank of El Salvador reporting $52 million in remittances processed through Bitcoin wallets in the first two quarters of 2022.
-Cross-border payments: Digital payment platform Strike’s “Global Send” feature:
Payment path of digital payment platform Strike, source: strike.me
In December 2022, Strike launched its “Global Send” feature, facilitating fast and low-cost payments from the United States to Africa and the Philippines. Through strategic partnerships with Bitnob in Africa and Pouch in the Philippines, Strike users can now use Lightning rails to easily send money to countries such as Nigeria, Ghana, Kenya, and the Philippines without incurring any fees.
Payments made through this feature are instantly converted to local currency and deposited directly into the recipient’s bank account, mobile money account, or Bitnob/Pouch account, depending on the recipient’s location.
In October 2022, Cash App connected to the Lightning Network, enabling its 47 million users to make Bitcoin payments seamlessly. The streamlined process involves users accessing the “Currency Tab” in the app, selecting Bitcoin, and generating a QR code or link to make payments with other Lightning-enabled wallets.
Lightning payment routing in CASH, source: twitter.com/MichaelRihani
- Bitcoin Lightning payments at major merchants
Merchants supporting Lightning Network: Shopify, PickNPay, NCR, Blackhawk, Clover
Strike has also been enabling Bitcoin Lightning payments for major US merchants. For example, Shopify now allows shoppers to purchase products using Bitcoin and Lightning invoices. This enables any online merchant using Shopify to accept payments using the Lightning Network instead of traditional rails. Strike has also partnered with Blackhawk, a global alternative payment network, to enable P2P Lightning payments for over 400,000 storefronts and 37,000 partners. Strike also announced a strategic partnership with NCR, the world’s largest point-of-sale payment provider, to promote the adoption of Lightning payments by major US retailers. In addition, Clover, a well-known point-of-sale software provider, has teamed up with Strike to bring Bitcoin’s Lightning Network to millions of merchants. The partnership will go through a 90-day trial period, allowing participating merchants to make faster, more cost-effective payments. Once the pilot is successful, this will enable Lightning payments by default for all Clover merchants, putting them on par with traditional card networks like Visa and MasterCard.
These recent partnerships showcase the evolving landscape of Bitcoin and Lightning Network innovation adoption in El Salvador, as well as the expansion of digital payments in Africa through strategic collaborations between fintech companies.
03 Lightning Network in 2023
1. Nostr — Decentralized data sharing protocol with Lightning Network integration
Nostr is an open protocol that aims to revolutionize social networking by creating a censorship-resistant global data sharing network. Nostr is designed to be simple and open, allowing decentralized social media apps to be built on top of it.
Damus is such a decentralized social media app, a competitor to Twitter, built on the Nostr protocol and available on iOS and Android platforms. Currently, the concept of an open and free social media network has gained strong support in the Bitcoin community.
In addition to consensus, Nostr will also promote the adoption of the Lightning Network as Damus has integrated various Lightning Network wallets such as Wallet of Satoshi, Strike, BlueWallet, etc.
2. Xapo Bank integrates Lightning Network for instant Bitcoin payments
Source: xapobank.com
In related news, users of private bank Xapo Bank can now instantly pay for small purchases of up to $100 at any vendor that accepts Lightning payments, without having to pay high fees or wait for lengthy blockchain confirmation times.
The Xapo Bank platform offers 4.1% annual interest on USD accounts with a guaranteed deposit of $100,000 and will soon offer up to 1% on Bitcoin accounts.
3. Lightspark — Enterprise Lightning Network Liquidity and Reliability Solution
Source: lightspark.com
Founded in 2022, Lightspark is a startup led by former Paypal president David Marcus that recently launched a Bitcoin Lightning Network platform designed to allow businesses to join the network.
Lightspark aims to make it easier for businesses to take advantage of the potential benefits of the Lightning Network, which is currently considered complex and technical for many businesses familiar with crypto payment operations.
Lightspark’s solution is to make the Lightning Network more reliable by relying on data science to continuously move liquidity to where it is most needed.
4. ZEBEDEE provides comprehensive lightning network services for gamers
Source: addons.mozilla.org
ZEBEDEE is a leading fintech company specializing in Bitcoin services for the gaming industry, driving a new era of seamless Bitcoin integration within the gaming community.
With its advanced tools, ZEBEDEE enables developers to create games and communities that accept Bitcoin as payment, bridging the gap between the real and virtual economies with the world's largest crypto asset.
The core of ZEBEDEE's product is their custodial Bitcoin wallet, designed specifically for gamers and streamers. Utilizing the Lightning Network, the wallet allows for instant sending and receiving of Bitcoin while protecting users from the complexities of crypto assets and blockchain.
This user-friendly method enables gamers with no crypto asset experience to make Bitcoin payments.
Gamers in Africa can now send and receive small amounts of Bitcoin via the Lightning Network while playing popular games such as Counter-Strike, thanks to a partnership between ZEBEDEE and crypto asset platform Bitnob.
Source: cointelegraph.com
ZEBEDEE’s expansion into the African gaming market marks another milestone in their mission to revolutionize the gaming industry through Bitcoin integration.
5. Live broadcasts and podcasts on the Lightning Network The integration of podcasts with the Lightning Network has made significant progress recently, and content creators can now take advantage of an open monetization platform with millions of users and access new monetization options that were previously unavailable.
VIDAR is one of the new entrants into the market, which aims to attract viewers through paid voice, SMS and live streaming.
Source: vida.page
6. Lightning Address Protocol: New Innovation of Lightning Network Address
Source: lightningaddress.com
In early 2023, a new internet identifier for Bitcoin Lightning wallets, called Lightning Address, was introduced. The protocol aims to make sending and receiving Bitcoin more intuitive, just like sending an email. With Lightning Address, anyone can easily send Bitcoin payments over the Lightning Network without the need for complicated codes or invoices.
Lightning addresses are a streamlined method for anyone who wants to instantly send Bitcoin over the Lightning Network. No QR codes, invoice generation, or long text strings required, Lightning addresses serve as reusable payment addresses.
Most Bitcoin Lightning wallet providers have integrated Lightning addresses into their systems, providing ease of use for their users.
7. Machankura: Non-custodial Bitcoin Lightning Wallet for Offline Payments
Source: 8333.mobi
As the world's second largest continent, Africa's Internet penetration rate is only 43%, and more than 740 million people still have no access to the Internet.
Due to lack of internet connectivity and affordability, most Africans use old-fashioned mobile phones with limited functionality; and with almost half of the continent’s population unbanked, providing basic financial services such as payments, savings and credit requires unique solutions.
Machankura is a non-custodial digital wallet that enables people to send and receive Bitcoin (BTC) without a smartphone or internet connection. Machankura uses Unstructured Supplementary Service Data (USSD) technology, which is similar to the Short Message Service (SMS) text protocol, but without the internet. USSD enables users to send and receive Bitcoin via a basic feature phone without the need for an internet connection.
Source: twitter.com/CowriesKumi
Machankura has attracted 3,000 active users since its launch in Q1 2023. Its innovative solutions provide financial services to unbanked Africans, paving the way for financial inclusion in the region.
8. Satimoto — Lightning charging for electric vehicles
Translation: We currently have 24227 charging points listed, 8898 of which are experimental. All of them can be paid for with Bitcoin sats on the Lightning Network! Still in early testing, we are checking integration and proper working of operators. We are very grateful to enthusiastic testers! Source: twitter.com/SatimotoApp
Satimoto is an innovative app that aims to revolutionize the electric vehicle charging industry in Europe by allowing users to pay for charging with Bitcoin via the Lightning Network.
The app has installed more than 20,000 electric vehicle charging stations across the continent, making it easier for users to charge their vehicles at different locations.
9. The growth of lightning wallets - Wallet Of Satoshi
Wallet Of Satoshi is a custodial wallet for the Bitcoin Lightning Network and has become one of the most popular wallets. Its widespread adoption and increasing usage make it an excellent indicator of organic user growth for the Lightning Network.
Wallet Of Satoshi users have made over 6 million Lightning Network payments since the app first launched.
Currently, despite the “crypto winter”, the latest statistics show that the wallet averaged 31,500 lightning payments per day in April. This positive trend is a good indicator of the growing demand for lightning-fast payments with low fees.
10. Payment Processor CoinGate is a well-known payment processor focusing on Bitcoin and other crypto assets, with a large user base of over 470,000 registered users, in addition to facilitating nearly 3 million payments and merchant orders worldwide.
Source: twitter.com/kerooke
In 2022, CoinGate reported processing more than 25,000 Lightning payments, a staggering 97% increase from the previous year. Additionally, the percentage of all Bitcoin payments made on the Lightning Network increased from 4.5% in 2021 to 6.3% in 2022.
04 Summary
Although Bitcoin is considered a reliable store of value in its early stages, people around the world are already using it as a method of payment and to settle accounts within their local communities.
Merchants in the Bitcoin Circular Economy accept Bitcoin directly, allowing users to pay with BTC. A wide range of businesses including restaurants, bars, hotels, retail stores and souvenir shops have signed up to participate in these economic activities.
The Lightning Network makes it possible to transfer small amounts of Bitcoin instantly with negligible fees, and as more businesses accept Bitcoin through the Lightning Network, it encourages more people to use Bitcoin as a means of payment, further accelerating the growth of these economies.
Original title: Lightning Network: 2018 to 2023 and Beyond Original link: https://medium.com/coinmonks/lightning-network-2018-to-2023-and-beyond-9ea9359ada77 Author: Wheatstones Translator: Huohuo
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