A new report by River, a company that provides Bitcoin technology and financial services, has revealed that the Lightning Network, a layer that enables fast and cheap Bitcoin transactions, has grown by 1,212% in two years.
The report, which was published on October 12, 2023, used data from node operators that account for 52% of the public capacity of the Lightning Network. The report estimated that at least 6.6 million transactions were routed through the network in August 2023, compared to 503,000 transactions in August 2021.
Bitcoin’s Lightning Network Has Been a Success
The document also estimated that the value of funds transacted on the Lightning Network in August 2023 was around $78.2 million, an increase of 546% from $12.1 million in August 2021. The average size of a Lightning Network transaction was $11.84, which shows that the network is mainly used for small payments that would be impractical on the Bitcoin blockchain.
According to the papers, the Lightning Network has become more global and diverse, with more activity coming from use cases related to gaming, social media tipping, and streaming. These use cases accounted for 27% of the network’s growth.
The report acknowledged that its estimations were conservative and did not include direct and private transactions between participants, which could be much higher. The report also noted that the Lightning Network still faces challenges such as user experience, liquidity management, and security.
The Lightning Network is a scaling solution that aims to make Bitcoin more suitable for everyday payments. It works by creating channels between users that allow them to send and receive payments without broadcasting them to the Bitcoin blockchain until they close the channel. This reduces fees and congestion on the network.
River is a Bitcoin services company that offers a suite of products for individuals and institutions, such as a Bitcoin exchange, a Bitcoin IRA, and a Bitcoin node. River’s mission is to bring Bitcoin to the mainstream by providing a simple and secure way to access the Bitcoin network.