Why the Lightning Network is a Bitcoin Game Changer


JThe Bitcoin network, hugely popular as it is, has long struggled with a scalability issue when it comes to payments. The Lightning Network, a “layer 2” protocol that overlays an existing blockchain, such as bitcoin, in this case, enables fast, simultaneous payments and has been a boon since it was added to the bitcoin network.

Lightning Network usage has declined since its November highs, but this spike is one that was driven by record cryptocurrency prices and saw a massive influx of traffic from commerce, Arcane Research explained in a post. recent on the current state of Lightning.

Image source: Arcane research article

When analyzing payments on the Lightning Network over the past few months, but excluding deposits and withdrawals to trading services, volume actually fell in November before continuing to hit new highs. In fact, the number of payments has doubled over the past year, with the value of payments made on the Lightning Network increasing by more than 400% in USD.

“Over the past year, Lightning has reached a level of development, liquidity and critical mass that has pushed it into becoming a truly usable network,” writes Lyn Alden, founder of Lyn Alden Investment Strategy and independent director of Swan Bitcoin, in the paper. “That’s not to say there isn’t a lot of work to do yet, but from a macro perspective, what we’re seeing is a payment layer with a network effect built on top of it. a settlement layer with a network effect, and that’s a really powerful combination.

Lightning’s user base has also grown exponentially. More businesses are offering payments through the network, which means a base of 100,000 users in the summer of 2021 has grown to over 80 million people with access to Lightning in March 2022.

Why the Lightning Network is a Bitcoin Game Changer

Image source: Arcane research article

“Advancing the Lightning Network, both technically and for increased adoption, is a thriving ecosystem,” write the authors of the paper. “With the increased adoption of Lightning Network, more large enterprises are entering the ecosystem.”

Invest in innovation like Lightning with BLOK

For investors looking to access the growing crypto space with diversified exposure, the ETF Amplify Transformational Data Sharing (BLOK) can be a great solution. BLOK invests in crypto companies that continue to grow and capitalize on the potential of blockchain, or provide vital components for that growth, such as Intel and bitcoin miners who are expected to use Intel’s chips.

The fund invests in companies such as Block, Paypal and, more recently, Robinhood, all of which transact on the Lightning Network.

BLOK currently has $904 million in AUM, is actively managed, and invests in companies directly involved in the development and use of blockchain technology. BLOK was also the first blockchain ETF approved by the SEC and launched in 2018.

The fund invests in partner companies or invests directly in companies using and developing blockchain technologies. However, the fund does not invest directly in blockchain technology or cryptocurrencies.

BLOK spreads its holdings across the size spectrum, investing in all market capitalizations. At the end of March, the top allocations within the blockchain industry included transactional at 34.74%, crypto miners at 22.05%, and venture capital at 11.56%. BLOK invests in the blockchain landscape, in miners, exchanges and developers.

BLOK has an expense ratio of 0.71% and currently has 47 holdings.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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