Binance to adopt Lightning Network to tackle this problem related to Bitcoin
- Binance to tackle network congestion by integrating Lightning Network.
- Bitcoin’s value continues to decline, prompting concerns as it enters a bearish trend.
Over the past 48 hours, Binance was compelled to pause Bitcoin [BTC] withdrawals twice due to network congestion. This congestion, coupled with the interruption in withdrawals, created a necessity and prompted the exchange to enable the Lightning Network.
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Binance to enable the Lightning Network
In light of overwhelming network congestion, Binance, a prominent cryptocurrency exchange, has taken a proactive step to incorporate the Lightning Network—an L2 scaling solution designed to enhance Bitcoin transactions.
This decision followed a temporary suspension of withdrawals on 7 and 8 May, which understandably caused concern among Binance users.
As one of the largest players in the crypto exchange space, Binance encountered a surge in activity that resulted in an extensive backlog of pending transactions.
The exceptional demand experienced by the platform led to network congestion, compelling Binance to temporarily halt withdrawals to address the situation.
Furthermore, realizing the pressing need for a sustainable solution, Binance moved to integrate the Lightning Network.
This payment protocol operates atop the Bitcoin blockchain, aiming to alleviate congestion by facilitating faster and more cost-efficient Bitcoin transactions.
How the Bitcoin Lightning Network Works
The Lightning Network serves as a protocol overlaying the Bitcoin blockchain, aiming to tackle the scalability and transaction speed limitations inherent in the Bitcoin network.
Its primary objective is to enable swifter and more cost-effective transactions by establishing a network of off-chain payment channels.
Every transaction in the Bitcoin network necessitates blockchain recording, demanding substantial time and computational resources.
Also, as more participants join the network and transaction volume surges, the blockchain can become congested, resulting in delays and higher fees. Binance faced this predicament, prompting the integration of the Lightning Network on its platform.
The Lightning Network resolves this challenge by permitting users to create direct payment channels between themselves.
These channels represent off-chain transactions that are not immediately logged on the Bitcoin blockchain. Instead, participants within a payment channel can engage in multiple transactions amongst themselves without involving the blockchain for each transaction.
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Bitcoin continues decline
As of this writing, Bitcoin was experiencing a consecutive decline. Also, it was trading at approximately $28,000, reflecting a decrease of over 1% in value.
Over the past 72 hours, it witnessed a loss of nearly 5%, and the downward trend persisted. According to the Relative Strength Index (RSI), the coin had entered a bearish trend as it fell below the neutral line.