An analysis of Bitcoin scaling in 2023

Bitcoin has remained the largest cryptocurrency by market capitalization with its simple value proposition as a store of value. However, there are significant limitations with Bitcoin, ranging from the lack of expressibility of Bitcoin’s smart contracts to the slow transaction speeds. As such, there have been significant efforts in scaling the Bitcoin blockchains, with state channels and sidechains. 

The Lightning Network is, undisputedly, the most prominent scaling solution for Bitcoin. Additionally, it is also the largest one by total value locked (TVL). Its TVL has surged from approximately $85 million in January 2023 to nearly $200 million as of this writing. However, a more accurate measure of the Lightning Network’s growth would be the 7.0% increase from 5,000 Bitcoins in January 2023 to 5,346 Bitcoins in November 2023. This demonstrates that the growth in TVL was primarily driven by the rise in Bitcoin’s price instead of actual Bitcoins being committed to the Lightning Network.