Bitcoin users in Africa have been increasingly adopting the Lightning network and stablecoins as transaction fees soar to their highest levels in two years. The Lightning network, a layer built atop the Bitcoin network, enables faster processing of transactions. While many Africans have already employed these tools, some users have reported instability in wallets utilizing the Lightning network.
The shift in demand is evident as customers now prefer transacting through stablecoins such as USDT. Others with low-volume transactions opt for Lightning network transactions over the base layer transactions, according to Heritage Falodun, founder of Africa-focused over-the-counter liquidity provider Digioats. This change is primarily due to the introduction of ordinals on Bitcoin, a protocol that allows for the creation of non-fungible tokens and BRC-20 tokens associated with some memecoins on the Bitcoin network.
Daily users of Bitcoin for transactions, including cross-border payments and remittances, have been significantly affected, as stated by Lorraine Marcel, the Kenya-based founder of Bitcoin DADA. The majority of the African population isn’t familiar with the Lightning network, with most educators onboarding newcomers to the unchain network due to its self-custody feature. The seemingly small transaction fees imposed on users are a considerable burden for those in African countries with struggling economies, adds Lagos-based Mary Imasuen, host of the Bitcoin Gamer Chat Podcast.
Traders on the continent face challenges as well, with most exchanges lacking Lightning network support. Kgothatso of Machankura wallet noted that many traders are still awaiting transaction confirmations from three days prior, with some trades being too expensive to settle. Bitcoin node operators are experiencing difficulties as well, as opening a channel to the node has become costlier than before.
This situation may lead to diminished network decentralization as fewer “everyday people” will be able to run effective nodes without using a well-funded lighting service provider (LSP), increasing centralization on Layer 2, says Nikolai Tjongarero, Bitcoin Educator and founder of EasySats and BTC Mining Namibia.
Even those who already utilize the Lightning network face congestion and liquidity issues with service providers. Despite these setbacks, many believe that the recent escalation in fees could encourage further integration of the Lightning network and other solutions. Marcel remains optimistic, hoping that the fee increase is temporary but acknowledges it as “an eye-opener.” Hermann Vivier, chairman of South African Bitcoin Ekasi, also sees this as a positive development, forcing users onto the Lightning network and fostering long-term growth despite short-term inconvenience.
Source: Coindesk
