Bitcoin Lightning Network Sees 1,200% Surge in Growth Over 2 Years

The Layer 2 Lightning Network of Bitcoin has experienced an astounding growth of 1,212% in just two years.

According to data from River’s Bitcoin-only exchange, the network recorded around 6.6 million routed transactions in August 2023, a significant increase compared to the 503,000 transactions observed in August 2021.

Impressive Growth Despite Market Challenges

In an Oct. 10 report, Sam Wouters, a research analyst at River, highlighted this remarkable growth. Despite a 44% drop in Bitcoin’s price and decreased online interest, the number of routed transactions increased, leading Wouters to jokingly comment 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 important to note that the reported 6.6 million Lightning routed transactions by River 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 River’s report, 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. 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 approximately 44,700 satoshis or $11.84. River estimated that there were 279,000 to 1.1 million active Lightning users in September. Gaming, social media tipping, and streaming accounted for about 27% of the transaction growth.

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. The primary cause of failed transactions was identified as liquidity limitations in payment routes.

River’s dataset consisted of 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, along with its impressive transaction volumes, raises questions about the future of Bitcoin as a medium of exchange.

Lightning’s superior performance compared to on-chain Bitcoin transactions in terms of velocity suggests that Bitcoin is well on its way to becoming a widely accepted medium of exchange.