Lightning Network

El Salvador’s Bitcoin wallet Chivo scores $52M in remittances in 2022

El Salvador payment app Chivo processed $52 million in remittances over the past six months, as expatriates make use of commission-free BTC transfers.

Salvadorans living abroad hsent over $50 million in remittances from January to May this year, according to the El Salvador Central Reserve Bank.

Douglas Rodríguez, president of the El Salvador central bank, unpacked the general economic outlook for the country on the local television news program Frente a Frente on Wednesday.

A major takeaway was the $52 million of remittances processed by national digital wallet service Chivo through the first five months of the year. This marks a 3.9%, $118 million increase in value when compared to the same period in 2021.

Chivo was launched in September 2021 as the Central American country became the first in the world to adopt Bitcoin (BTC) as legal tender. The launch of the app reportedly attracted more than 2 million users in less than a month, leading to major teething problems for the state-endorsed payment platform.

The government-sanctioned payment service provider was relaunched in February this year, necessitated by the onboarding of an estimated 4 million users looking to make use of low fees for payments and transfers made in BTC. American cryptocurrency exchange software firm AlphaPoint came onboard to address scaling and stability issues.

Related: Central African Republic president launches crypto initiative following Bitcoin adoption

Chivo offers users commission-free transfers and payments in BTC and U.S. dollars. El Salvador’s president and Bitcoin proponent Nayib Bukele has previously claimed the app will save citizens some $400 million in annual commissions spent using conventional remittance and payment service providers in the country.

The application also makes use of the Bitcoin layer-2 payment protocol Lightning Network, which provides low-fee BTC transactions. The adoption of Bitcoin and Chivo in El Salvador has had a measurable effect on the uptick in Lightning Network transaction volumes — with a 400% increase in payment volume over the past year.

Bitcoin Lightning Network developer updates node software with Taproot support

The latest software release, named lnd 0.15 beta (v0.15-beta), aims to empower developers to create solutions for more use cases by leveraging the Bitcoin Network’s capabilities.

Lightning Labs, a developer of the Bitcoin (BTC) Lightning Network (LN), released a beta version of the Lightning Network Daemon (lnd) — a complete implementation of the LN node — with added support to the latest protocol upgrades including Taproot and Musig2, among other improvements.

lnd is a software component that handles various aspects within the LN including managing a database, generating payment invoices and revoking payments, to name a few. The latest software release, named lnd 0.15 beta (v0.15-beta), aims to empower developers to create solutions for more use cases by leveraging the Bitcoin network’s latest capabilities.

In the announcement, Lightning Labs’ product growth lead Michael Levin revealed that over 50 contributors participated in launching the company’s first release in the year 2022, adding that:

“This release gives complete Taproot support for the internal lnd wallet, making it one of the most advanced Taproot wallets today. Further, this release has support for an experimental Musig2 API compliant with the latest BIP draft.”

The primary goal of MuSig2, a multi-signature scheme, is to allow for the creation of aggregate public keys that can be used in Taproot outputs, thus, introducing the ability to authorize transactions with Schnorr signatures.

Unlike previous versions, the beta release also removes the redundant data from the revocation log bucket, which showed a reduction of 95% in database size during initial testing. While the update does not reclaim space for existing states, Levin envisioned that a follow-up release may include a migration feature that could reclaim old disk space.

Staying true to their commitment to make the LN more reliable, robust, and secure, Lightning Labs introduced greater control over pathfinding preferences — ultimately helping to reduce the transaction fees by identifying the lowest cost route.

Related: Bitcoin network power demand falls to 10.65GW as hash rate sees 14% drop

The Bitcoin network recorded the year 2022’s lowest power demand of 10.65 gigawatts (GW) on June 25. As a result, the computing power for mining BTC blocks came down to 199.225 exahash per second (EH/s).

Bitcoin network power demand from 2018-2022. Source: ccaf.io

The sudden reduction in Bitcoin’s power demand is directly correlated to the falling hash rate. The mining hash rate corresponds to the computing power required by BTC miners to successfully mine a block — a key security metric.

Bitcoin and Lightning Network can save DeFi from adversity: MicroStrategy CEO

Bitcoin provides a “sound ethical, economic, and technical foundation for DeFi,” said Michael Saylor.

In light of the recent fragility in the decentralized finance (DeFi) sector, Bitcoin (BTC) maximalist and MicroStrategy CEO Michael Saylor feels that Bitcoin and the Lightning network can come to the rescue of the DeFi market.

With two enormous protocols, Terra and Celcius, facing acute difficulties within a month of each other, the DeFi sector is going through a tough time. And in a recent tweet, Saylor suggested that Bitcoin and Lightning could help stabilize the industry.

According to Saylor, Bitcoin provides a “sound ethical, economic, and technical foundation for DeFi.” He went on to say that the Lightning protocol and BTC token will be used to construct the next generation of DeFi.

Saylor was responding to a Bloomberg story on Tuesday, highlighting numerous key concerns in the DeFi field. Mahin Gupta, founder of digital-asset custody platform Liminal, told Bloomberg that:

“What is happening with Celsius will have serious repercussions for the industry. It’s a not-insignificant player, and its apparent failure will have ripple effects.”

Celsius Networks has closed down withdrawals and other transactions on its platform barely a month after the spectacular collapse of the Terra blockchain, which enticed investors with yearly returns of around 20%. The collapse of Terra, which was triggered when its stablecoin lost its 1-to-1 peg to the United States dollar, and Celsius’ halt in withdrawals have added to cryptocurrencies’ losses.

As a result, the MicroStrategy CEO has been very enthusiastic about Lightning Network, Bitcoin’s layer 2-scaling solution. According to Saylor, Bitcoin is the future of money and the Lightning protocol will aid in transaction scalability. He added that:

“If you’re going to do payments and transactions high speed, you’re going to need a base layer that’s ethically sound, economically sound, and technically sound. That’s what Bitcoin is. But then billions and billions of transactions are going to go on a layer 2 like Lightning.”

To date, DeFi applications on the Bitcoin network haven’t attained the same level of popularity as they have on other blockchains like Ethereum and Solana. Still, some people who have studied DeFi believe that it can be implemented in a sustainable manner on the Lightning Network, saying “stablecoins and fully collateralized loans against your BTC do have merit.”

Related:Bitcoin Lightning Network capacity charges through 4,000 BTC

According to the nonfungible token (NFT) project the littles creator Wil Lee, BTC and LN may give a boost of energy to DeFi and NFTs. He told Cointelegraph that while various new protocols are still in the experimental phase, protocols like BTC and LN already demonstrate their inherent strength, adding that:

“For anyone who wants to enter the crypto, stability is something they want to be sure about. When I know that an established protocol is in the picture, I’ve peace of mind, which lends strength to the overall crypto ecosystem as well. Backed by none other than BTC, your DeFi or NFT project is sure to have many more takers.”

As per Ignite’s Aliasgar Merchant, DeFi is “struggling,” and everyone is doing everything they can to make it through the crypto winter. He emphasized the recent events on Terra and Celius as proof that DeFi, which is intended to be the core of Web3, is failing. The two most important aspects of developing a solid DeFi system, according to Merchant, are interoperability and scalability. He added that “once the base is firm we can start focusing more on niche protocols to cater to our DeFi needs.”

Bitcoin hash rate marks all-time high as BTC price drops below $25K

Complimenting the new hash rate ATH of 231.428 exahash per second, Bitcoin’s network difficulty stands at a strong position of 30.283 trillion.

Bitcoin (BTC) hash rate, a network security measure based on computing power for mining, achieved a new all-time high (ATH) of 231.428 exahash per second (EH/s) amid an ongoing bear market that witnesses BTC price plunging below the critical $25,000 mark.

Hash rate is directly proportional to the computing power of mining equipment for confirming transactions, which deters bad actors from manipulating on-chain transactions. Complimenting the new hash rate ATH, the Bitcoin network difficulty stands at a strong position of 30.283 trillion.

The estimated number of TH/s the Bitcoin network is performing in the last 24 hours. Source: Blockchain.com

Some of the most popular Bitcoin mining pools based on market share include Poolin, AntPool, F2Pool, ViaBTC and SlushPool. However, a majority of the total hash rate is contributed by distributed miners, shown as ‘Others’ in the graph below.

An estimation of hash rate distribution amongst the largest mining pools. Source: Blockchain.com

Despite the market crash that threatens to wipe numerous crypto projects out of existence, the Bitcoin ecosystem continues to strengthen its core by consistently recording new ATHs for hash rate, network difficulty and network capacity.

In addition, the Bitcoin Lightning Network — the layer-2 technology built on Bitcoin — increased its capacity to 4,000 BTC, furthering its goal to enable faster and cheaper peer-to-peer BTC transactions.

With continued support from miners, traders and developers, Bitcoin remains well-positioned to be hosted on the most secure blockchain network in the world.

Related: Lowest weekly close since December 2020 — 5 things to know in Bitcoin this week

Block subsidiary TBD announced plans to build “Web5,” a new decentralized web centered around BTC, underscoring founder Jack Dorsey’s belief that the largest blockchain network will play a major role in the internet’s evolution.

Unlike Web3’s aim to decentralize the internet, Dorsey envisions Web5 as an identity-based system that runs only on the Bitcoin blockchain. As previously explained by Cointelegraph, based on TBD’s prototype documents, Web5, as a decentralized web platform (DWP), allows developers to create decentralized web apps via DIDs and decentralized nodes. 

Bitcoin Lightning Network capacity charges through 4,000 BTC

The layer-2 technology built on Bitcoin now has 4,000 Bitcoin or $120 million locked up allowing for near-instant payments around the world.

There’s cause for celebration from the world’s largest cryptocurrency. The Lightning Network hit the 4,000 Bitcoin (BTC) public capacity milestone, meaning $120 million in value is ready for peer-to-peer payments.

The Lightning Network first broke the 1,000 BTC barrier in August 2020 and the 2,000 BTC barrier in July 2021. The capacity has doubled in the space of 18 months.

Lightning Network capacity growth since January 2022. Source: Glassnode.

CoinCorner CEO Daniel Scott told Cointelegraph that “we had slow and steady growth with Lightning capacity to begin, but since Jan[uary] 2021, the uptick has been strong.”

Danny Brewster, CEO of United Kingdom-based Bitcoin exchange Fast Bitcoins told Cointelegraph that Lightning Network capacity “likely passed 4K a long time ago with private channel metrics not being publicly available.”

“With that being said, the constant growth has been a great start for the Lightning Network and I foresee it continuing into the future, as long as all stakeholders, from developers to entrepreneurs building businesses continue to push forward.”

A layer-2 payment protocol built on Bitcoin’s base layer, the Lightning Network allows for near-instant transaction finality. In the following video, Paco de la India — a Bitcoin-powered world traveler — buys a pair of shorts from Mozambique-based Bitcoiner Jorge, using the Lightning Network:

Lead on-chain analyst for Glassnode, James Check, told Cointelegraph, “The expansion of Bitcoin’s Lightning Network appears to be transitioning out of the “reckless” phase, and into proper experimentation by early adopters.”

Related: The Lightning Network Lunch: A Bitcoin contactless payment story

“As wallet designs and user experience improve, more kinks can be worked out, and the network will mature. The persistent growth of public Lightning capacity and channel count is a reflection of this vote of growing confidence and growing utilization,” he said.

Scott agreed, sharing that the positive trend is likely to continue “as more companies adopt Lightning and we see more use cases come to fruition.”

“The influence of El Salvador adopting Bitcoin seems to have been an inflection point for Lightning, giving it confidence and proving a real-world use case.”

According to data from 1ML, the average and median transaction cost for sending Satoshis (the smallest denomination of a Bitcoin) over the Lightning is well under $0.01, proving it packs a punch as payment technology. 

Brewster concludes, it’s an “awesome start but a long way to go. It really is still early!”