Bitcoin’s Layer 2 Lightning Network has witnessed a 1,212% growth in just two years.
In August 2023, the network recorded approximately 6.6 million routed transactions, a substantial increase compared to the 503,000 transactions observed in August 2021, according to River’s Bitcoin-only exchange data.
Surprising Growth Amidst Market Challenges
River’s research analyst, Sam Wouters, shed light on this remarkable growth in an Oct. 10 report. Despite a 44% drop in Bitcoin’s price and reduced online interest, the number of routed transactions increased, leading Wouters to humorously remark on Twitter, “‘Nobody is using Lightning’ should now be a dead meme.”
“Nobody is using Lightning” should now be a dead meme.
Launching a new #Bitcoin report from @River: How the Lightning Network grew by 1212% in 2 years ⚡
It’s time to pay attention to the incredible work of so many people in the space 👇 Link below in the 🧵 pic.twitter.com/FuGLwGHR4R
— Sam Wouters (@SDWouters) October 10, 2023
It is crucial to note that River’s reported 6.6 million Lightning routed transactions is considered a conservative lower-bound estimate. The firm acknowledged its inability to assess private Lightning transactions or those occurring between just two participants.
According to a report by River, in terms of transaction volume, Lightning processed $78.2 million in August 2023, marking a 546% increase from the $12.1 million recorded in August 2021 by K33. Lightning now handles at least 47% of Bitcoin’s on-chain transactions, signaling its growing importance as a medium of exchange.
The average Lightning transaction size in August 2023 was around 44,700 satoshis or $11.84. River estimated that 279,000 and 1.1 million Lightning users were active in September. A significant portion of transaction growth, approximately 27%, was attributed to gaming, social media tipping, and streaming.
High Success Rate and Future Implications
River also reported a 99.7% success rate for Lightning payments on its platform in August 2023 across 308,000 transactions. Payment route liquidity limitations were identified as the primary cause of transactions.
River’s dataset comprised 2.5 million transactions, with the nodes in this dataset accounting for 29% of the network’s total capacity and 10% of its payment channels.
The continued expansion of the Lightning Network, coupled with its impressive transaction volumes, raises questions about Bitcoin’s future as a medium of exchange.
Lightning’s outperformance compared to on-chain Bitcoin transactions in terms of velocity suggests that Bitcoin’s transformation into a widely accepted medium of exchange is well underway.
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