- The adoption of El Salvador’s bitcoin, Twitter enabling BTC to migrate through Lightning, and Paxful integrating Lightning, all in September, have led to user adoption and payments activity in the network.
- Flash payments doubled in September, while the channel’s overall capacity grew by 26%.
- The number of users with access to Lightning payments rose 11164% to 9.7 million in September, compared to 87,000 in August.
- Rapid use of in-person transfers, including merchant payments and gift cards, grew 122% in one month, while online services increased 65%.
Today, Arcane Research published a lengthy report on the state of the Lightning Network, assessing Bitcoin’s second layer from the inside. The paper touches on channel capacity, wallet payments size, daily usage and the ability to flow funds. By gaining a better understanding of how the network is changing industries around the world, the reader may imagine the direction the world is likely headed.
Visa transactions per second vs Bitcoin On-chain transactions per second vs Lightning Network. Source: Visa and Arcane Research.
This article summarizes the main points of the report. All statistical data were pulled from the Arcane paper, along with images.
Bitcoin’s capacity in the Lightning Channel has passed a major milestone, crossing the 3000 BTC mark. However, the report argues that general Lightning metrics such as channel capacity do not show the true scale of usage growth. Instead, Arcane uses the Lightning wallet’s payment volume to measure adoption, which is far more than the total capacity of Bitcoin in the channels.
In September, when El Salvador made Bitcoin legal tender, Paxful Integrated Lightning and Twitter made BTC tips available through Lightning, the volume of payments nearly doubled, compared to just a 26% increase in public channel capacity.
The growth in the volume of payments (in USD) from wallets on the Lightning Network versus the growth in public capacity (BTC). Compound monthly.
Arcane has shown that with more users accessing Lightning, usage has shifted from mostly paying online services to regular daily use such as physical merchant payments and gift cards.
Users who can access Lightning Payments.
Quick payments and personal transfers from wallet users.
With Lightning passing its use and certification test in El Salvador, other countries will emulate this approach. The obvious advantages between Bitcoin and Lightning over unstable banking systems and hyperinflated national currencies will push people and governments to embrace the suite of sovereign monetary technology.
As a result, Lightning adoption may turn out to be a parabola in this decade. A possible scenario for Lightning’s use of household expenditures and remittance payments in other countries with weak banks and dollars up to 2030.
A possible scenario for the use of Lightning from household expenses and transfer payments in other countries with weak banks and dollars up to 2030.
Lightning can also disrupt how services are provided. It enables micropayments for small business transactions, as evidenced by the gaming industry, which has frequently used the network as a payment rod.
Game rewards and earnings only accounted for an estimated $4,000 of incoming transaction volume in August but did so in 189,000 transactions. – The average transaction size is 2 cents. No other payment system will allow such micro-transactions to be settled instantly without counterparty risk.
Lightning Wallet Statistics – Distribution of incoming transactions (August 2021). Excluded from wallet to wallet.
By permanently enabling micropayments, Lightning will allow people to stream money for content. In fact, it’s already happening today, with services like Sphynx Chat enabling podcast listeners to stream podcasts while enjoying their favorite shows, effectively acting as a tip service.
Why not be able to pay for every minute you listen to songs on Spotify or watch a movie on Netflix? Why should you give away your credit card details for content service if you can pay directly from your Lightning wallet without Disclosing any information about you?
Lightning has the potential to revolutionize the content industry as much as the Internet did in the early 2000s.
Number of global users of some services where Lightning could become an alternative payment method.
As users start paying for gaming, video, and audio content with bitcoin through the Lightning Network, the layer-2 solution is likely to see significant growth in users and activity over the decade.
Users of game, video and audio services pay with Lightning.
“Based on a conservative estimate of 1 hour used per day on these services and an average of 25% of that time spent consuming services with Lightning payments, our estimate is equal to at least 364 trillion Lightning transactions per year by 2030,” according to the report.
Such predictions may seem silly, but remember that many people said the same thing about the Internet when it came to public attention.
“Many were skeptical about the internet and how it could be used to transfer files, emails, voice and other content. These technical challenges were resolved faster than many expected.” Today, 5 billion people use the internet, and we send more than 60 billion WhatsApp messages daily, Arkan said. It is estimated that we will send 376 billion emails per day by 2025.”
Similar to the Internet, Bitcoin has the power and potential to disrupt many industries and human habits; However, it will be all about the money instead.
“Bitcoin and the Lightning Network also rely on open source protocols and software, in the same way as the Internet, making another Internet story more likely, with innovation and contributions from around the world,” the report said.
Lightning is just beginning to scratch the surface of the endless possibilities that Bitcoin will offer and its multi-layered approach to dealing with healthy money in society.
