Many people think that Bitcoin has only one use, which is a store of value. It’s too slow and expensive, they say.

Another usual observation is that nobody wants it.

Yet, you have massive institutions entering the club every day, even a conservator institution like Massachusetts Mutual Life Insurance Co. that recently bought $100 million of Bitcoin for its general investment account. Or Goldman Sacks that has begun trading bitcoin futures. Or even JPMorgan that launched an in-house Bitcoin Fund for private bank clients.

In 2019, the total world wealth was about $360.6 trillion.

Wealth preservation is a big deal for significant institutions. It is the biggest deal on earth. And individuals and institutions want to take care of their assets the best way they can.

Today, Bitcoin is seen by the major financial institutions as a store of value. Like Gold, financial institutions can now buy and store Bitcoin in their balance sheets. It’s a digital form of value, with the advantage of having its finite production at 21 million Bitcoin.

According to its use and demand, its price will tend to increase in value in the next few decades, going into counter-cycle with the devaluation of Fiat money.

However, the Bitcoin blockchain can do much more than that. So on top of the Bitcoin blockchain was build a layer 2 solution that enables secure, private, and near-instantaneous transactions at little to no cost- it’s called the lightning network.

It would have been worth creating this technology even if we didn’t use the lightning network for anything else but allowing the unbanked to access a bank account, credit and savings.

Currently, the young entrepreneur Jack Mallers, with his company Strike, is already helping El Salvador citizens who work outside borders to use the lightning network to send remittances back to their families without paying exorbitant fees.

In addition, some El Salvadorians use the lightning network to buy and sell services and goods because the technology allows them to do it.


    Bitcoin Lightning Network growth evolves phenomenally.

The Bitcoin lightning network has surpassed 25,000 active nodes for the first time. In addition, the network is growing stronger with more nodes and more channels.

The Lightning Network allows users to make transactions through off-chain channels to reduce congestion on the Bitcoin blockchain.

All of the transactions are rewritten into a single transaction and settled on the Bitcoin network, allowing for millions of transactions in a matter of seconds.

Yet, only 58% of the nodes operate a channel. Those who operate a channel can earn yield, so the incentive is there for those who protect the system.

Node operators receive a fee as an incentive to keep the chain working, but not every node is connected. Instead, transactions “hop” through channels, using the Tor network, until it reaches a target.

Last July, 1ml reported the number of channels has increased by roughly 78%, from 1,800 to over 2,300 BTC. That means more connections between the nodes, increasing the chances of finding a more efficient experience.


    Final Thoughts

The Bitcoin network had a scalability problem.

Bitcoin is limited to only seven transactions per second on the base layer, but the technological innovation of the lightning network made it possible to transact faster and cheaper.

The way developers have been disrupting money is something that keeps amazing me.

If any ecosystem has flaws- because it’s an open-source network- it has the power to every single developer in the world to upgrade new and more effective solutions.

It’s like having a company, but every good worker from any part of the world could add some value to that same company.

As a macroeconomic student, I see these innovations as very interesting, independently having a more centralized or decentralized financial world.

For me, what’s fascinating is that this technology will be available for every human being on planet earth. And it can evolve into other forms of technologies that serve the good interest of everyone.

The lightning network has resolved an essential constraint on the Bitcoin network.

At the same time, other blockchains like Ethereum, Cardano, or Polkadots are platforms where new financial projects, totally decentralized, gain preponderance in the financial world — usually called DeFi (Decentralized Finance).

We are in an Exponential Age, where technological innovations reach more and more people faster and faster.

Are we on the brink of the most significant recession ever seen or on the verge of the most considerable technological disruption in human history?