The Lightning Network – a layer atop the Bitcoin blockchain that uses its own special rules to facilitate cheaper, faster transactions – had about 5,335 public nodes in April 2020. Now that number sits at 10,348, a roughly 94% increase. This figure only includes nodes with public connections, however, and the real number is likely higher when factoring nodes with private connections.
As Bitcoin’s on-chain fees grow alongside bitcoin’s price, scaling technologies like Lightning offer users a cheaper and faster way to transact. If bitcoin will ever be used as a day-to-day currency, a scaling solution like Lightning is paramount, and avid bitcoiners even use the network today to purchase goods and services.
Consider this Iranian Lightning user who used bitcoin to buy a PlayStation Now pass that is otherwise restricted by sanctions:
With Bitcoin’s Lightning network seeing more activity than ever, the total number of payment channels on the network (the two-way payment avenues that power Lightning’s plumbing) is now over 45,000. The Lightning Network currently holds 1,185 BTC, worth some $69 million.
Lightning Network adoption
Though introduced in 2017, the past two years have been critical for Lightning’s growth.
At the end of 2020, crypto exchange Kraken announced it would support the feature. Before Kraken, the only prominent exchanges to adopt Lightning were Bitfinex and the bitcoin-only River Financial. Exchange integrations make it cheaper for their customers to deposit and withdraw bitcoin, often paying cents in fees instead of the single or double-digit dollar amounts they may pay Bitcoin’s main network.
In addition, Jack Mallers’ Strike – a Venmo-esque payment app that uses Lightning to settle USD and other fiat balances – came out of beta this year and is forthcoming full rollouts in a number of markets.
With businesses adding Lightning, the network’s liquidity and routing capabilities are improving. User-friendly apps like Strike are also making it easier to onboard users to what has historically been an even more unwieldy technology for the uninitiated than Bitcoin.