Binance Revolutionizes with Lightning Network: Bitcoin at Lightning Speed

Binance
FILE PHOTO: Binance app is seen on a smartphone in this illustration taken, July 13, 2021. REUTERS/Dado Ruvic/Illustration/File Photo


IMPORTANT POINTS:

  • Binance successfully integrates the Bitcoin Lightning Network protocol to speed up transactions.
  • Despite initial doubts, the Binance lightning node shows robust growth with 77.7 BTC capacity.
  • The Lightning Network is essential for the mass adoption of Bitcoin, allowing up to 1 million TPS.

On July 16, Binance announced that it had incorporated the layer-2 protocol, Bitcoin Lightning Network, into its platform, allowing users to make deposits and withdrawals using it. Less than two months after this breakthrough, the platform has reached a significant milestone with the protocol.

Fast-growing Binance node

Data from the Amboss analytics platform indicates that Binance’s lightning node has experienced a growth spurt. Currently, the exchange house is ranked 14th in terms of capacity, with 77.7 BTC out of a total of 4,873.39 BTC in the network.

This indicates that Binance’s integration of the Lightning Network has been very well received and that Binance users are actively using the platform’s lightning node to process their Bitcoin transactions.

However, this milestone comes after a report suggested that Binance’s implementation of the Bitcoin Lightning Network was not gaining traction as users were not creating channels on the platform. According to the report on August 16, no new channels had been created in the last 30 days.

Given this, Amboss clarified that Binance, unlike other competitors such as Kraken, does not share node connection details, preventing “general users” from opening direct channels with Binance.

Importance of the Lightning Network in the Adoption of Bitcoin

Bitcoin was created with a primary focus on decentralization and security, without paying much attention to its performance.

Although many argue that Bitcoin’s decentralization and security are more relevant than its performance, it is clear that Bitcoin needs to scale if it is to be widely adopted for micropayments and other transactions.

Therefore, a layer-2 network like the Lightning Network is essential for Bitcoin to scale and be adopted as a global payment system.

For context, Bitcoin processes 7 transactions per second (TPS), a low figure compared to newer blockchains like Cosmos, Solana, and Polygon, which boast TPS of 10,000, 24,000, and 65,000, respectively.

However, with the help of the Lightning Network, Bitcoin can process transactions at a speed of 1 million TPS.

Binance recognized the need to integrate this protocol due to the massive boom in Bitcoin transactions on its platform. By doing so, the exchange can process user transactions faster and cheaper.

For their part, other exchange houses such as Kraken, Bitfinex, OKX and BitStamp have already incorporated the Bitcoin Lightning Network to manage the growing demand for Bitcoin without facing network congestion.