The launch of the Bitcoin Lightning Network received a boost from the launch of Nostra, a US dollar payment and decentralized social media platform.
Bitcoin’s Lightning Network (LN) capacity recently surpassed an all-time high of 5,000 bitcoins.
Bitcoin
ticker down
$26,309
.
The Lightning Network is a neutral protocol built on top of Bitcoin, and it does not have a “native” token attached to it like many decentralized finance (DeFi) platforms currently do.
Although the total liquidity of the Lightning Network is less than 0.5% of Ether
ETH
ticker down
$1,712
For DeFi contracts, the increase in Bitcoin LN capacity versus the decrease in the amount of ETH locked in smart contracts is encouraging for LN development.
Although liquidity on LN has continued to increase, the number of channels on the peer-to-peer network fell sharply in November following the fall of FTX. This may be due to the exclusion of mining clients as well as miners running LN nodes.
However, the potential end of miner capitulation and the emergence of Bitcoin-based applications such as the non-fungible token LN could lead to an end to channel capitulation. More than 2,000 new channels have been added to the network since the beginning of 2023.
A report by Valkyrie Investments states that LN adoption is gaining momentum in emerging markets such as South America and Africa, largely due to the efforts of LN mobile payment app Strike.
In December 2022, the company launched an LN-based remittance service in Africa. The service offers free money transfers from the US to Africans in Nigeria, Ghana and Kenya. Strike later announced a similar program in the Philippines.
More recently, the company announced dollar payments with LN, potentially allowing users to send dollars from Strike Cash balances to savings and Visa-enabled accounts. The app converts USD to BTC in the background and USD to destination. Since LN is fast and cheap, the risk due to Bitcoin price volatility is minimal.
International payments from the US can cost up to $45 per transaction, taking hours or sometimes days to transfer. Therefore, users may start favoring strike-based payments over traditional remittance channels.
A recent report by Marty Bent revealed that LN payments have increased this year on Satoshi’s wallet, one of the top wallets on the Lightning Network. In addition, Podcasting 2.0 – a podcasting platform that accepts LN payments – has also increased tips sent to writers.
Related: Retail Giant Pick n Pay Accepts Bitcoin in 1,628 Stores Across South Africa
Nostr promotes LN uptake
Another factor affecting LN uptake is nostra uptake. According to the protocol’s GitHub page, Nostr is a simple, open protocol that enables global, decentralized, censorship-resistant social media. The protocol allows social media applications to be built on top of it.
Damus, a Twitter competitor, makes Nostra and has an iOS and an Android app The idea of an open, free social media network is resonating widely in the crypto space, with Bitcoin pioneers such as Jack Dorsey and Adam Back Noster strong supporters.
Apart from their ideological similarities, Nostr can promote LN adoption as Damus integrates various LN wallets such as Satoshi Wallet, Strike, BlueWallet and others. According to a report by LN analyst Kevin Rook, more than 600,000 users have signed up for Nostra. This can help users onboarding to LN as Nostr supports Bitcoin payment network through Nostr Zap.
Although LN does not have a native token, there are opportunities for LN nodes to charge fees to facilitate transactions and provide liquidity. At present, however, the income is negligible. As such, Lightning Network’s growth appears to be organic, and it is well positioned to become the leading global payments network — as industry insiders predict.
