Bitcoin as the default global digital currency
With the growing adoption of the Lightning Network, Bitcoin could become a reliable payment method and value storage.
Bitcoin is a cryptocurrency whose popularity, acceptance, and adoption have increased since its inception and introduction. While this digital currency has faced many challenges, the free market has created innovative solutions, enabling it to overcome them. Today, Bitcoin remains the king of cryptocurrencies. It’s also among the top-performing digital assets.
This virtual currency has silenced critics and continues to expand its usage and relevance. Achieving its current success within 12 years makes Bitcoin a remarkable cryptocurrency. However, a real specter has haunted Bitcoin since Satoshi Nakamoto introduced it back in 2008. And that’s speed.
With the increasing adoption of this digital currency, retail investors, venture capital, institutional money, and other countries continue to join the Bitcoin ecosystem. Consequently, the Bitcoin network faces throughput problems and congestion. And these can prevent Bitcoin from realizing its revolutionary goals.
Even with Bitcoin’s scalability challenges and the rising popularity of altcoins, the cryptocurrency keeps building upon its past successes. Inevitably, Bitcoin is becoming the global digital reserve currency.
It’s no secret that more people are purchasing Bitcoin with fiat money on platforms like Bitcoin System. That’s because they’ve known the potential of this virtual currency. Such platforms enable people to invest in Bitcoin by converting fiat cash into this virtual currency. But this brings more investors into the Bitcoin blockchain.
Consequently, the blockchain network should scale up to meet the increasing needs of the digital economy. Throughput or transactions per second is the most common scalability measure for the Bitcoin network. While Visa’s payment network processes around 24,000 transactions per second, Bitcoin can handle 4 to 5 transactions in the same duration. Thus, Bitcoin is very slow.
And this latency by the Bitcoin network is partly a reason for the altcoins’ rise. Many users feel that Bitcoin doesn’t prioritize speed. Instead, it aims to serve as a hedge against inflation and value storage. Undoubtedly, people and enterprises need to preserve wealth to dodge fiat currency’s inflation ravages.
However, some people argue that Bitcoin isn’t living up to its promise of serving as a peer-to-peer payment system. Bitcoin Cash acted as a potential scalability solution. It increased the block size to allow miners to include more transactions at a time. But this solution also processes 116 trades within a second. Thus, it failed to solve this problem.
The Lightning Network followed and tried to offload the Bitcoin blockchain capacity into another payment channels’ layer. Broadcasting each transaction to the whole network, including the main blockchain, drives the scalability issue for this cryptocurrency. Therefore, introducing Lightning Network means two entities can simultaneously open the same payment channel and complete frictionless and instantaneous payments. Thus, the system would only broadcast a channel when the entities close or open a channel.
This solution works magic by ensuring that a user doesn’t have to open a channel with another person to transact. Instead, this network sends funds across the tracks. Thus, the few transactions that the Bitcoin network can handle per second could increase into billions.
And this makes the original Satoshi’s vision plausible. Consequently, people can now see Bitcoin as a viable global, digital currency that people can use every day. The adoption of the Lightning Network has exponentially increased because it solves Bitcoin’s scalability issue. That’s why countries like Vietnam, El Salvador, and the Philippines that need an alternative to the national currency embrace Bitcoin.
One Currency to Rule the Rest
With the growing adoption of the Lightning Network, Bitcoin could become a reliable payment method and value storage. Several reasons explain why Bitcoin could be the dominant global currency. For instance, Bitcoin was the initial cryptocurrency. It’s also well-known, commonly held, and highly regarded by people and enterprises the world over.
Additionally, Bitcoin has many use cases due to its decentralization. And this, combined with the high and fast throughput, makes Bitcoin a potential global, reserve digital currency.