Binance to enhance Bitcoin transactions by implementing Lightning Network nodes
Binance announced its intention to integrate the Lightning Network as a solution to alleviate bottlenecks, following congestion experienced on the Bitcoin network on 7 May.
Highlights
- Lightning Network nodes allow faster transactions between nodes while addressing the scalability issue of Bitcoin
- The congestion was primarily caused by increased BRC-20 transactions
Binance, one of the top cryptocurrency exchanges, made an announcement on 20 June stating that it had started running nodes on the Bitcoin Lightning Network. This move is an important step towards enabling deposits and withdrawals through the Lightning Network on Binance.
Binance appreciated users who spotted the new Lightning nodes and confirmed their existence on Twitter. However, Binance highlighted that further technical tasks need to be accomplished before the complete integration of Lightning Network, assuring users that updates will be shared during the process.
What are lightning network nodes?
Joseph Poon & Thaddeus Dryja first formally proposed a draft as “Lightning Network whitepaper 0.5” in February 2015. The Lightning Network is a Layer-2 payments protocol built on top of the Bitcoin blockchain and other cryptocurrencies.
It aims to enable fast transactions between nodes while addressing the scalability issue of Bitcoin. It allows users to create payment channels, conduct multiple Lightning Network transactions without involving the base blockchain, and eventually close the channel by broadcasting the final settlement transaction.
Closure of the channel can occur cooperatively or uncooperatively, with measures in place to prevent fraudulent actions. Users can also settle the channels on the Bitcoin blockchain when necessary.
Binance acknowledges the potential of Lightning Network
Following the congestion experienced on the Bitcoin network on 7 May, Binance announced its intention to integrate the Lightning Network as a solution to lessen bottlenecks. Binance acknowledged the potential of the Lightning Network for enabling BTC withdrawals during such situations.
The congestion was primarily caused by increased BRC-20 token transactions, including the popularity of memecoins. Binance has faced legal challenges from the SEC, creating uncertainty, but there is a sense of relief as a consent agreement between Binance, Binance.US, and the SEC has been approved by Judge Amy Berman Jackson. This agreement effectively dismissed the SEC's temporary restraining order that aimed to freeze Binance.US assets.
