- Binance to tackle network congestion by integrating Lightning Network.
- Bitcoin’s value continues to decline, raising concerns as it enters a bearish trend.
In the past 48 hours, Binance was forced to pause Bitcoin [BTC] recordings twice due to network congestion. This congestion, coupled with the interruption of withdrawals, created a need and prompted the exchange to turn on the Lightning Network.
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Binance to enable the Lightning Network
In the face of overwhelming network congestion, Binance, a prominent cryptocurrency exchange, has taken a proactive step to include the Lightning Network, an L2 scaling solution designed to improve Bitcoin transactions.
This decision followed a temporary one suspension of withdrawals on May 7 and 8, which understandably worried Binance users.
As one of the biggest players in the crypto exchange space, Binance experienced a surge of activity that resulted in an extensive backlog of pending transactions.
The exceptional demand the platform was experiencing led to network congestion, forcing Binance to temporarily halt withdrawals to address the situation.
In addition, Binance recognized the urgent need for a sustainable solution and moved to integrate the Lightning Network.
This payment protocol works on top of the Bitcoin blockchain and aims to reduce congestion by enabling faster and more cost-efficient Bitcoin transactions.
How the Bitcoin Lightning Network Works
The Lightning Network serves as a protocol that overlays the Bitcoin blockchain, aiming to address the scalability and transaction speed limitations inherent in the Bitcoin network.
The primary goal is to enable faster and more cost-effective transactions by establishing a network of off-chain payment channels.
Every transaction in the Bitcoin network requires blockchain recording, which takes a lot of time and computing power.
As more participants join the network and transaction volume increases, the blockchain can become overloaded, resulting in delays and increased costs. Binance faced this predicament, which led to the integration of the Lightning Network on its platform.
The Lightning Network solves this challenge by enabling users to create direct payment channels among themselves.
These channels represent off-chain transactions that are not immediately recorded on the Bitcoin blockchain. Instead, participants within a payment channel can perform multiple transactions among themselves without involving the blockchain for each transaction.
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Bitcoin continues to fall
At the time of writing, Bitcoin was experiencing a sequential decline. It also traded at around $28,000, reflecting a more than 1% drop in value.
In the past 72 hours, it witnessed a loss of almost 5%, and the downtrend continued. According to the Relative Strength Index (RSI), the coin had entered a bearish trend when it fell below the neutral line.
Source: TradingView