Binance opts for the Bitcoin Lightning Network to avoid…
- Binance confirmed that it was working to enable Bitcoin Lightning Network for deposits and withdrawals.
- The exchange’s token BNB pumped 3.89% in the 24-hour period.
Binance [BNB], the world’s largest cryptocurrency exchange, took to Twitter to announce a significant enhancement that could influence how the trading platform handles enormous volumes of transactions in the future.
Read Binance Coin [BNB] Price Prediction 2023-24
The crypto behemoth confirmed that it was working to enable Bitcoin [BTC] Lightning Network for deposits and withdrawals, in a response to users who noticed the new lightning nodes over the past few days. However, Binance added that full integration would take some time.
Some eagle-eyed users spotted our new lightning nodes recently. Yes – that's us!
However, there's still more tech work to be done. We'll update once Lightning is fully integrated. https://t.co/N0oN8561sN
— Binance (@binance) June 20, 2023
Significance of the Lightning Network
The unprecedented congestion on the Bitcoin blockchain in May was what prompted Binance to implement the Lightning network. Interestingly, the massive backlog of transactions forced Binance to pause withdrawals twice in a span of 48 hours.
Over time, as Bitcoin has grown in acceptance, the network’s traffic has likewise soared. Given the design limitations of the current network, scaling has become an issue. Moreover, the chain has been consistently struggling with transaction throughput as well.
Lightning Network is a layer-2 solution (L2) on top of the Bitcoin blockchain. It is designed to solve glitches associated with the base network by introducing off-chain transactions.
Put simply, these transactions use direct channels between users. And multiple transactions can be handled without waiting for the blockchain to confirm them. Once these payment channels are closed, the transactions land on the mainnet for confirmation.
Tough times for Binance
Binance’s move comes at a time when it is increasingly facing regulatory hostilities, not just in the U.S., but other major markets too. After being sued by the U.S. SEC earlier this month over financial irregularities, the exchange was facing trouble across European countries.
Also, the negativity has impacted the exchange, especially its American Arm, Binance.US. According to CoinGecko, the daily spot trading volume on the exchange has plunged 80% since the SEC lawsuit.
Is your portfolio green? Check out the Bitcoin Profit Calculator
At the time of writing, the exchange’s token BNB pumped 3.89% in the 24-hour period to $251.25, possibly reacting to the embrace of the Lightning Network by parent entity.
Additionally, the token made some recovery over the past week driven by an increase in buying pressure, as per Santiment.