Bitcoin Liquid sidechain surpasses the amount of BTC held in the public Lightning Network channels.

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Bitcoin Liquid sidechain surpasses the amount of BTC held in the public Lightning Network channels.

The Lightning Network may be the most heavily promoted project to improve the Bitcoin network. This second-layer protocol, built using Bitcoin smart contracts, enables faster and cheaper payments by not having to record transactions on the slow and expensive Bitcoin main network.

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Although the Lightning Network appears to be the key player in expanding Bitcoin payments to millions of new users in the coming years, it currently seems that the majority of users' interest in cryptocurrency is largely driven by price speculation.

This also helps explain why Liquid Network, a Bitcoin mainnet-anchored, permissioned federated sidechain, will be much more important for Bitcoin in 2020. Recently, the BTC reserves on the Bitcoin sidechain Liquid have surpassed those within the public Lightning Network channels.

Tracking the Development of Liquid and Lightning Networks

As shown in the above chart, in early March 2020, Liquid Network surpassed the Lightning Network in terms of BTC reserves. According to Liquid.net, there are currently 952.9435822 BTC on the Liquid Network, while DeFi Pulse data shows that there are approximately 918 BTC within the public Lightning Network channels.

The total value of BTC in Liquid and public Lightning Network channels is around $12.5 million, a relatively small figure compared to the entire Bitcoin network. For example, Coinbase alone holds 10% of the total circulating Bitcoin supply, valued at approximately $12.2 billion at current prices.

However, we need to clarify the distinction between public and private Lightning Network channels. The total amount of BTC held on the Lightning Network will be higher than what we can access from publicly available data because some individuals do not wish to broadcast the existence of their Lightning nodes to the world.

Data from BitMEX Research reveals what the real Lightning Network holdings may have been in February. Based on their blockchain dataset, they point out that 88% of BTC on the Lightning Network is stored on the public network. With this information, the estimated total BTC on the entire Lightning Network (including private channels) is roughly 1043 BTC, more than the current reserves on the Liquid Network.

Nevertheless, the Bitcoin assets on the Liquid sidechain are evidently steadily growing and are poised to surpass the total BTC held in public and private Lightning Network channels in the near future.

Both Liquid and Lightning Networks clearly play a role in expanding the user base of the Bitcoin network. In fact, these two technologies can be combined to achieve more robust performance, such as instant atomic swaps between Liquid and the Bitcoin mainnet.

On one hand, given how most people are currently using Bitcoin, the development of Liquid may temporarily be more crucial; on the other hand, the Lightning Network will continue to evolve and prepare for the day when cryptocurrency payments become more widespread.

This article is from our partner LONGHASH

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