Bitcoin’s Lightning Network Surpasses $1 Million Capacity, 14,000 Payment Channels

Francisco Memoria
  • Bitcoin's Lightning Network has surpassed a 100 BTC capacity, and is about to have a $1 million capacity.
  • This, in over 10,000 payment channels operatd by nearly 3,000 nodes.

Bitcoin’s Lightning Network (LN), often seen as the layer-two solution that will help the flagship cryptocurrency be adopted throughout the world by boosting transaction speeds and eliminating network congestion, has recently surpassed 14,000 mainnet payment channels, and a 180 BTC capacity (~$1 million).

The technology behind the scaling solution is still fairly new and only started taking off this year, partly thanks to funds that came from Twitter founder Jack Dorsey. Its development has continued during the market’s downturn, and its growth has been steadily speeding up, as in February of this year it was still at 1,700 open payment channels.

At press time, data shows the network has a 249.8 BTC (~$1.3 million) capacity, and 14,488 payment channels. It currently has over 4,000 nodes, with each having an average of 12.3 payment channels. The average node capacity is of 0.143 BTC, or $796, while the average payment channel has a capacity of 0.023 BTC, $128.

A live visualization of bitocin's lightning network

Notably, the network’s capacity surged by a whooping 125% recently. It's currently unclear why its capacity increased in such a small amount of time. In the past few months, various companies, including Valve and Stripe, stopped accepting bitcoin payments, citing high fees and slow transaction times. These came as the network was clogged late last year when the cryptocurrency hit an all-time high of nearly $20,000.

Despite its young age, the Lightning Network has reached a number of notable milestones. This year some companies have already started accepting payments through the scaling solution, including VPN provider TorGuard and Bitcoin-to-Gold exchange Vaultoro.

The network already had its “pizza transaction” after a user paid for a physical item through it. By moving payments to a second layer, the Lightning Network is set to theoretically help BTC’s blockchain once again have low fees and fast confirmation times, as most microtransaction will occur on the Lightning Network.

Shitcoin.com owner Andreas Brekken ran a LN node in the past. In his last review he highlighted that sending payments through the layer-two solution is “cheaper than the regular bitcoin network,” but added it “suffers from routing errors and wallet bugs that make it impractical even for highly technical users,” making it clear the LN is still in its infancy.

CZ Explains How Binance Dealt With Aftermath of $40 Million Theft

On Sunday (May 19), Changpeng Zhao (aka "CZ"), the Co-Founder and CEO of digital asset exchange Binance, told the crypto community what he and his team had been up to since the May 7 security breach that resulted in a theft of over 7,000 BTC from their Bitcoin hot wallet. 

What Happened on May 7?

According to CZ, the hackers involved in the security breach somehow managed to get control over a number of user accounts and structured large withdrawals from these accounts in such a way thay managed not to be detected/noticed by Binance's "pre-withdrawal risk management checks." Their "post-withdrawal risk monitoring system" only noticed something was wrong after the hackers had moved the stolen BTC off of the exchange via a single transaction, at which time it immediately suspended all "subsequent withdrawals." 

At first, the Binance team was not exactly sure what had happened, and so they decided that the safest course of action was for CZ to send out a tweet to say that the "withdrawal servers" were in "unscheduled maintenance mode" while the team was investigating the incident. 

Communication With the Crypto Community

Once the team had confirmed that the exchange had been hacked, information about the security incident was broadcast to the outside world via all of Binance's communication channels (such as Telegram, Twitter, and Medium). 

Since the team could not be sure which user accounts the hackers had access to, it was decided that it would be too risky to allow further withdrawals to be made until the team had the chance to make "significant changes" to the platform (to make it more secure). Binance's announcement on May 8 estimated that the exchange needed to do "a thorough security review" and estimated that this would take about "ONE WEEK," and that during this period, "deposits and withdrawals" would need to "REMAIN SUSPENDED."

By being fully transparent in their communication with Binance users, they were able to receive "tremendous support" from them.

CZ's Periscope AMA Session on May 8

Seeing CZ live put much of the Binance community "at ease." Unfortunately, because CZ had been up all night, he was not in an ideal mental state when he did the AMA. Just before the AMA, his team told him that a Bitcoin Core developer had suggested that it would be technically possible to roll back the single Bitcoin transaction carried out by the hackers by "hugely incentivizing the miners." CZ made the unfortunate mistake of mentioning this "reorg" idea (which he now realizes is a "taboo topic") during the AMA, for which he took a heavy beating (especially from hardcore Bitcoin maximalists) on Twitter (and elsewhere). 

CZ's Mental State Right After Being Told About the Bitcoin Theft

Although he was in a "F***, F***, F***” state" for around 10 seconds, a few moments later, he "began to come to terms with it," and a quick mental calculation told him that the theft of around 7000 BTC (equivalent of around $40 million at the time) could be fully covered by their SAFU fund. Meanwhile, his team had already gone into "War Mode", and their professionalism and support cheered up CZ. 

Support From the Crypto Community

Binance received support from many sources: people defending him and Binance on social media platforms, and helping to answer questions; the Binance Angels (who are all volunteers) "addressing questions" and "reassuring" users on "multiple communities"; analytics firms helping with the tracking of the stolen funds; exchanges and wallet services offering to help by blocking "any deposits associated with the hacker addresses"; and "numerous offers for help from law enforcement agencies around the world."

A Blessing in Disguise?

"Speaking with various team members, and as correctly analyzed by community members, such as Gautam Chhugani, this incident may actually be a good thing for us in the long run. Security is a never-ending practice. There are always more things to do in security, and we have implemented many of them in this last week and will continue to implement more in the future. Given this incident, Binance has actually become far more secure than before, not just in the affected areas, but as a whole."