Bitcoin’s Lightning Network, a layer-2 scaling solution, has seen remarkable growth, as reported by Bitcoin financial services company River Financial. One of the most impressive statistics is the surge in routed transactions, which skyrocketed from 503,115 in August 2021 to 6,599,553 in August 2023, representing an astonishing 1,212% growth. Routed transactions involve more than two nodes, suggesting that the actual numbers could be even higher.
Analyst provides Bitcoin’s Lightning Network data
Sam Wouters, a research analyst at River Financial and author of the report, was taken aback by these figures. Wouters emphasized the need to verify the calculations with external parties, given the sheer scale of the growth. Despite having only 5,000 Bitcoin locked in the Lightning Network and the ongoing bear market, the Lightning Network has achieved remarkable results. This layer-2 solution exists atop the Bitcoin network, allowing users to transfer funds between each other without relying on the blockchain for every transaction. The Lightning Network’s performance stands out against Bitcoin’s overall trend.
During this period, Google searches for the top cryptocurrency declined by 45%, accompanied by a 44% drop in its price. Achieving four-digit growth under these circumstances is particularly noteworthy. The volume of transactions on the Lightning Network also witnessed a significant surge. In August 2021, the volume was $12.1 million and 303 BTC. Fast forward to August 2023, and these numbers have surged to $78.8 million and 2,950 Bitcoin, marking a 546% and 874% increase, respectively. A surprising trend that has emerged is the impact of gaming on the network’s growth rate, with hundreds of thousands of monthly active users participating.
The impact of gaming on blockchain networks
Notably, the narrative that the Lightning Network would be ideal for micropayments is very much alive. The report reveals that 25% of all network activity occurs in the 1-10 sat range (or $0.0002), primarily for gaming and streaming. Another 25% falls in the 10-1,000 sat range, primarily related to tipping, while transactions above 10,000 sats are primarily used for commerce, remittance, and node rebalancing. Not everyone is surprised by this growth. Some, like the creator of the decentralized social media network Nostr, Fiatjaf, view these numbers as a natural evolution, considering that the network is still relatively small.
Two years ago, it was considerably smaller, underscoring the substantial progress made. Fiatjaf notes that users on Nostr are heavily engaged in “zaps,” which could be a driving force behind the network’s success. Another factor contributing to this growth is custodial wallets. However, both Fiatjaf and Wouters express concerns regarding this trend. Non-custodial solutions, which offer full self-sovereignty to users, have been relatively slow to enter the Lightning Network market, forcing users to opt for centralized options like the Wallet of Satoshi, which controls the private keys.
Wouters emphasizes the need for improvement in the non-custodial solutions sector, acknowledging that it involves challenging but vital problems. He remains hopeful that investors will take note of this report and support the developer base working on enhancing the Lightning Network. In conclusion, the report by River Financial dispels the notion that “nobody uses Lightning” and underscores the significant and growing impact of this layer-2 solution in the Bitcoin ecosystem.
