Over the past year, Lightning reached a level of development, liquidity, and critical mass that pushed it over the line into being a truly usable network. That's not to say that there isn't still plenty of work to be done, but from a macro perspective, what we are witnessing is a payment layer with a network effect built on top of a settlement layer with a network effect, and that's a truly powerful combination.
A layered approach is the best design to maximize the benefits of what a blockchain offers. It allows the base layer to remain immutable and decentralized, while innovation happens on multiple different higher levels including Lightning, Liquid, and others. Successful financial systems of history have been layered approaches, and Bitcoin is shaping up to be a powerful financial system for the 21st century.
Arcane Research helps to quantify and visualize what's happening with Lightning, to see how it's beginning to solve real problems for real people around the world.
The Bitcoin Network's decentralized and secure design, with a small blocksize and relatively long blocktime, does not come without drawbacks. The transaction capacity of the Bitcoin blockchain is far too low for using bitcoin payments at scale.The Lightning Network represents a solution to Bitcoin's slow throughput without compromising the security of the Bitcoin Network. Utilizing the Lightning Network, millions of people can send fractions of a bitcoin at instant speed—at the same time.Lightning Network usage is growing fast The use of the Lightning Network is somewhat of a blackbox. Therefore, most are left to look at imperfect public metrics to gauge the growth in Lightning Network usage. By gathering actual transaction data to estimate the use of the Lightning Network, we observe that adoption is rising quickly. The number of payments has roughly doubled over the last year, while the value of the payments has increased by more than 400%, measured in US dollars.