bitcoin lightning network

Inside The State Of The Lightning Network

By davidgyoung | Alternative Investing | 25 Oct 2021

Let's dive into the great report published by Arcane Research and supported generously by OpenNode.  Many of the graphs and datasets seen here are the work of Arcane Research and we want to ensure we give them full credit.  This report published in October of 2021 is full of great data and insights.

lightning network compared to visa

The above helps set the table.  In a nutshell and somewhat superficially looking at it - BTC struggles to scale in terms of transactions/second but the legacy system isn't exactly perfect either.  Enter the Bitcoin Lightning Network, which can certainly begin to operate alongside the legacy system as we continue to use things like the BlockFi Visa credit card while also ramping up lightning and ways to get free Bitcoin via micro-transactions. 

Here's a chart that succinctly depicts the initial ramp in Lightning adoption back in 2018 followed by the resurgence we are seeing in 2021:

btc lightning

This is not uncommon for the adoption of any tech, and in fact we have seen this with NFTs as well.  You get this initial burst of activity by the true early adopters, then there is a fizzling out and flatline effect.  Months or years later there is another surge suggesting the core tech at play is for real and adoption is advancing meaningfully.  Lightning and NFTs are past that very early stage and ramping up as people get free Bitcoin playing games and mint NFTs and play with DeFi using various protocols

Many sets of data, to include the one above, tend to orient around total amount of BTC capacity on the Lightning Network, certainly a very useful piece of data to assess adoption and growth.  But what about people actually using Lightning and the use of Lightning wallets?  We can look to El Salvador in September of 2021 to see if there experiment with making BTC legal tender and the associated distribution of Lightning wallets is having an impact.  To wit:

lightning wallet growth

As you can see, people are in fact using BTC and Lightning in El Salvador and elsewhere as the payment volume through Lightning wallets is growing at a much faster rate than the total amount of BTC capacity on the network.  This makes sense as we know most transactions are small in size, and this reinforces the notion that beyond just making BTC legal tender the people are actually picking it up and using it. 

We will check out some more stats and data points in another post.  What are you seeing out there with the Lightning Network?



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davidgyoung Verified Member

BTC since 2013. Investor. Entrepreneur. Always looking to learn and develop.

Alternative Investing
Alternative Investing

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