According to Arcane Research, Lightning Network usage has been on a strong increasing trajectory since late last year, but growth accelerated in September as a result of El Salvador’s Bitcoin acceptance.
Arcane Crypto’s research division believes that the Lightning Network will experience parabolic growth as the adoption of the Bitcoin layer-two payment protocol accelerates over the next decade.
On Oct. 5, Arcane Research released the “State of Lightning” study, which examined the Lightning Network’s existing capacity, the wallet payment volume, the rising rate of adoption, and the transition from online services to everyday use.
The research makes bold projections for the Lighting Network’s future, including 90 percent of Salvadorians over the age of 15 having access to Lightning payments by 2026 and 50 million Lightning users, totaling $17 billion in yearly payments for remittances and household expenditure, by 2030.
Arcane views gaming and streaming video and music as significant use cases for Lightning, with streaming firms such as Spotify or Netflix able to leverage micro-transactions to offer pay-per-minute or pay-per-second streaming services, offering an “enormous” opportunity to onboard new Lightning users.
By 2030, it anticipates 700 million users in these groups. Arcane estimates that one hour per day will be spent on these services, with 25% of the time spent on those that accept Lightning payments: “Our estimate thus equals a minimum of 364 trillion Lightning transactions each year,” the study states.
The study, performed in cooperation with Bitcoin payments startup OpenNode, demonstrates how the Lightning Network’s usage has risen significantly since late last year. The acceptance of Bitcoin (BTC) by El Salvador on Sept. 7 accelerated the network’s growth:
“In September 2021, growth accelerated to a parabolic rate. This was largely due to El Salvador’s adoption of Bitcoin as legal currency.” Additionally, the study notes the significance of Paxful, a peer-to-peer cryptocurrency exchange with a 7 million user base, enabling Lighting payments last month, as well as Twitter’s integration with the network through the creation of a BTC tipping service for its 186 million users.
Currently available capacity
Since the network launched on Bitcoin over three years ago, it has expanded to a capacity of approximately 3,000 BTC, with 17,000 nodes and 73,700 distinct channels.
“As of this writing, the public Bitcoin capacity on Lightning exceeds $120 million, with users worldwide appreciating the ability to perform near-instant small payments at extremely low costs,” the study stated. However, while publicly available measures such as total channel capacity demonstrate strong adoption growth, wallet payment volumes have outperformed that statistic significantly since August.
“We have concentrated our efforts on widespread usage via wallet providers since we feel this is the most accurate indicator of acceptance. As a result, the projected statistics exclude developer activity, channel rebalancing, and the majority of business-to-business transactions,” the study stated.
According to Arcane, wallet payment volume has risen by 20% month over month since August, considerably above the monthly growth rate of 10% reported by the channel capacity statistic. “The difference increased further in September, with payment volume nearly tripling in comparison to a 26% rise in public channel capacity,” the study stated.
El Salvador and several other nations
By 2026, Arcane believes that over 90% of El Salvador’s population aged 15 or older would have access to Lightning payments. The projection is based on a number of fundamental assumptions, including that internet use would continue to increase at a 15% annual pace, as it did in 2018 and 2019, and that President Nayib Bukele’s September estimate of 2.1 million Chivo wallet users is accurate.
According to the study, if other nations with “limited banking access” follow El Salvador’s lead, there may be 50 million Lightning users on the network by 2030, representing $17 billion in yearly payment volume.