Bitcoin’s Lightning Network Sees 1,212% Growth in Routed Transactions
The layer 2 Lightning Network of Bitcoin has experienced a remarkable growth of around 1,212% over the past two years. In August, there were approximately 6.6 million routed transactions, a significant increase compared to the 503,000 transitions in August 2021. This data was provided by River, a Bitcoin-only exchange.
Factors Behind the Surge in Routed Transactions
In a report published on October 10th, River research analyst Sam Wouters explained that despite a 44% drop in Bitcoin’s price and reduced online search interest, there was still a surge in routed transactions. Wouters also took a jab at Lightning critics, stating that the belief that “nobody is using Lightning” should no longer be relevant.
Lower-Bound Estimate and Transaction Volume
River’s figure of 6.6 million routed transactions is the lowest possible estimate. The firm obtained the figure of 503,000 from a previous study conducted by K33 in 2021. It should be noted that private Lightning transactions or those between only two participants were not assessed by River.
In terms of transaction volume, $78.2 million worth of transactions were processed on Lightning in August 2023, marking a significant increase of 546% compared to August 2021’s $12.1 million figure.
Lightning as a Medium of Exchange
Wouters highlighted that Lightning now processes at least 47% of Bitcoin’s on-chain transactions and stated that this metric will be interesting to monitor as it indicates Bitcoin’s growing role as a medium of exchange.
Average Transaction Size and Active Users
In August 2023, the average Lightning transaction size was approximately 44,700 satoshis or $11.84. River estimated that between 279,000 and 1.1 million Lightning users were active in September. The gaming, social media tipping, and streaming sectors contributed to 27% of the transaction growth.
Lightning Payments Success Rate and River’s Data Set
River reported a 99.7% success rate for Lightning payments on its platform in August 2023, based on 308,000 transactions. The main reason for payment failure was the lack of a payment route with sufficient liquidity to facilitate the transfer.
The data set used by River consisted of 2.5 million transactions, representing 29% of the network’s capacity and 10% of payment channels.
Hot Take: Lightning Network Achieves Exponential Growth
The Lightning Network has experienced remarkable growth over the past two years, with a surge in routed transactions and increased transaction volume. Despite a decline in Bitcoin’s price and reduced search interest, Lightning has proven its viability as a medium of exchange. This growth indicates Bitcoin’s expanding role beyond a store of value. With an average transaction size of $11.84 and millions of active users, Lightning is making significant strides in becoming a widely adopted payment solution. Its success rate and increasing usage across various sectors highlight its potential for further development and mainstream adoption in the future.
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