Has Kraken Implemented the Bitcoin Lightning Network?

Kraken, a major American cryptocurrency exchange founded in 2011, is said to have started deploying the Bitcoin (BTC) Lightning Network for users. Although the exchange has not made any official announcement yet, it is still warmly welcomed by the community.

Mr.Hodl, a Bitcoin proponent, took to Twitter on Wednesday to share that Kraken had adopted the Lightning Network. He included a screenshot of the Kraken withdrawal process, which showed the option for users to send a withdrawal request using a Lightning wallet to obtain BTC from their accounts. 

The Lightning Network is a Bitcoin layer-two technology that was launched in March 2018 following the activation of Segregated Witness on the network the year before. 

The protocol aims to decrease the number of transactions maintained on the blockchain by facilitating transactions between individual users using smart contract “payment channels.” For settlement, the final balances can be broadcast to the Bitcoin blockchain.

Kraken’s withdrawal notice on the screenshot read,

“The Lightning network runs on top of the Bitcoin blockchain to enable more uses of Bitcoin.” 

So far, no other Kraken users have reported the alleged installation of BTC Lightning on the platform. Instead, as of Tuesday, some Kraken users stated they couldn’t withdraw BTC using Lightning, implying that the Lightning functionality should be extended to all accounts within 24 hours. 

Kraken and the Bitcoin Lightning

The initial reports on Kraken’s BTC Lightning application appeared in mid-March, with cryptocurrency aficionados predicting a commencement date based on data from the Amboss Lightning Network explorer. 

According to Amboss data, the entire capacity of Kraken’s purported node alias capacity on Lightning is more than 2.9 billion satoshis or 29 BTC. 

Source: Amboss

The Lightning Network is one solution to the Bitcoin protocol’s scalability problems. Lightning allows for quick and extremely low-cost off-chain transactions, but it does so at the risk of Bitcoin being locked up in payment channels that are dispersed across Lightning nodes. 

In 2021, Lightning Network traffic increased dramatically, owing in part to El Salvador’s onboarding of the entire country and Twitter’s integration of Bitcoin Lightning tipping. Arcane Research predicted 700 million Lightning Network users by 2030 in a report released in October.