Bitcoin Lightning Network Grows 1,200% in Two Years

By Brayden Lindrea, Cointelegraph; Compiled: Pine Snow, Golden Finance

Bitcoin’s layer 2 Lightning Network grew an estimated 1,212% in two years, with around 6.6 million routing transactions in August, a significant increase from 503,000 transactions in August 2021, according to bitcoin exchange River.

In an October 10 report, River research analyst Sam Wouters explained that despite a 44% drop in bitcoin prices and a significant reduction in online search interest, routed transactions (using more than two nodes to help transfer money) have grown.

In a follow-up tweet on October 10, Wouters said: “‘Nobody is using lightning’ should be a dead stalk by now.”

The 6.6 million numbers traded by the River flash circuit is a lower bound estimate – the smallest possible value it can evaluate. The company also took 33 data from a 2021 study by K33 (formerly Arcane Research) from 503,000 in August 2021, adding that it cannot evaluate private lightning transactions or transactions between just two participants.

Expect monthly growth in routing Bitcoin Lightning transactions. Source: River

In August 2023, the Lightning Network also processed $78.2 million in transactions, a 546% increase from the $12.1 million transaction volume provided by K33 in August 2021. Wouters noted that the Lightning Network is currently processing at least 47% of Bitcoin’s on-chain transactions.

“It would be an interesting metric worth monitoring,” he added. “This shows that Bitcoin is increasingly becoming a medium of exchange.”

Expect monthly growth in routing Bitcoin Lightning trading volumes. Source: River

In August 2023, the average Lightning Network transaction size was around 44,700 satoshis or $11.84. River estimates that between 279,000 and 1.1 million Lightning users were active in September.

The company attributed 27% of the deal growth to gaming, social media, and streaming.

River says that in August 2023, Lightning Pay had a success rate of 308,000 transactions on its platform, with a success rate of 99.7%. The main reason for failure is that there is no payment path with sufficient liquidity to make the transfer.

River’s dataset contains 2.5 million transactions. The nodes in the River dataset represent 29% of all capacity on the network and 10% of the payment channel.