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18 Mar 2022
The Bitcoin Lightning Network ecosystem is growing
Growth in public capacity has slowed, but plenty is going on in the ecosystemThe public capacity on the Bitcoin Lightning Network grew exponentially from April through September in 2021, with an annualized growth rate of more than 700 percent. Since, public capacity growth has been more subdued, only growing at a 48 percent annualized rate since the end of September. Public Capacity on the Lightning Network. Source: bitcoinvisuals.comThe public capacity development gives the impression that the frantic growth on the Lightning Network last fall has slowed down. We are now gathering data on actual usage from industry participants for an updated State of Lightning report. While early indications support the notion that usage growth is moving slower than during the frenzy surrounding El Salvador's bitcoin adoption, plenty is going on.Demand growth is recuperating a bit, but more people than ever are now a click away from performing their first Lightning payment. The number of users with access to Lightning payments* has increased from an estimate between 100 -150 thousand in August 2021 to more than 80 million in March 2022. Users with access to Lightning payments*. Source: Arcane Research
* defined as users with "one-click access" to Lightning payments on an installed applicationThe ecosystem working on Lightning is growing as well, both driven by existing players expanding and newcomers entering. El Salvador's bitcoin adoption has highlighted the need for merchant payment solutions. Ibex Pay and OpenNode have onboarded huge international fast-food chains and many local businesses, making typical household payments in bitcoin available to the masses in El Salvador. Content creators are increasingly utilizing the Lightning Network for monetizing content and avoiding centralized intermediaries. The market share is still miniscule, but the numbers are rising rapidly.“The killer application” is yet to be found or in an early phase of the hockey stick, but many developments point to increased general adoption. To highlight some evidence, more and more neobank applications and cryptocurrency exchanges are integrating Lightning payments, and Twitter has added the feature of tipping users through the Lightning Network. This article is just a small primer to the updated State of Lightning report we will publish in early April. In the report, many notable developments not mentioned here will be highlighted - happening in the flourishing Lightning Network Ecosystem depicted below. The Lightning Network Ecosystem - Draft version. Source: Arcane ResearchWe are in the process of combining data from Lightning ecosystem participants to shed more light on the use of the Lightning Network than public numbers like capacity can. If you are willing to share data that can help us create a more accurate overview, please reach out.