#102 Growing At The Speed Of Lightning

Good Morning Everyone,

The lightning network continues to experience incredible growth. In my opinion most people are completely unaware of the significance of what is happening on top of bitcoin on the second layer. At the protocol layer transaction volume and speed is limited by block space (the number of transactions that can fit in a block), and the speed at which blocks are mined, and thus transactions added to the blockchain - which is on average every 10minutes.

The lightning network is how bitcoin scales. It enables near free and instant transactions. It enables anyone on the planet to send a bearer asset with absolute finality to anyone else, anywhere in the world and with the security of bitcoin. Transactions at the speed of light. Peer to peer, that do not rely on any single entity in the middle to process your transaction, or that can censor your transaction.

If you compare this to the legacy banking and financial system, this is such an incredible phase shift, few seem to be grasping the enormity of it. Lightning essentially brings bitcoin to life as a medium-of-exchange, full-filling one of the three primary properties of a monetary good.

With lightning you can now stream value peer-to-peer in the same way you can send other forms of information like messages, audio or video over the internet - and most importantly it requires no assistance from a single other entity. 24/7x365. Doesn’t matter if it’s a weekend. Doesn’t matter if it’s a public holiday. Doesn’t matter about your geographical location, your race, your political beliefs, whether you can provide 100 points of ID. None of that matters. A fully open and public payment rail for humanity.

Given how little attention lightning is getting, it’s incredible to see the growth of the network. Below are a few charts that illustrate this growth including Network capacity, the number of active nodes, the number of lightning channels as well as the mean or average channel size.

Every metric is moving strongly up and to the right, demonstrating that the fundamentals of the network are stronger than ever, despite bitcoins short term price-action volatility.

NETORK CAPACITY

The current network capacity continues to create all-time highs - currently reaching 3970.7 bitcoin total. This is up from approximately 1200 a year ago - a 330% increase in capacity in 12 months!

NUMBER OF LN NODES

The number of nodes in January 2020 was hovering just below 5000. At the time bitcoin price was around $8000USD. In March ‘22 it peaked just above 20,000. That’s a 4x increase in that time. In the last year the number has approximately doubled. This is consistent with overall node growth since 2018.

NUMBER OF CHANNELS

The number of channels open at the beginning of 2020 was 31,000. This number is now around 85,000. In 2021 this number grew at 238% and is currently just shy of it’s highs having peaked at 86,000 - and now around 84k.

AVERAGE CHANNEL SIZE

The average channel size is currently creating all-time highs. Which stands to reason that this would need to increase to facilitate the same amount of value transfer capability while we’re still utilising the USD as a unit of account. On a bitcoin standard however, this would be less important, and if anything would very likely be the opposite. As the price of bitcoin has dropped, the channel size in sats needs to increase otherwise the overall capacity of the network would drop from a dollar value perspective. A year ago the average channel size was 0.0284 (2.8m sats). The current average is 0.0467 or 4.7m sats - a trailing 12 month increase of 167%

When you ignore the noise and look at the actual fundamentals of lightning - the growth is simply incredible. Even more so when you use the network - it’s truly an incredible experience that continues to get better and better from a UI and UX perspective. Near free and instant settlement of a bearer asset with cash finality that requires no intermediary, and is available to anyone, anywhere.

The future of money is being built out right in front of us. Closed, centralized legacy networks simply have no chance against the open, global monetary standard that is bitcoin and the lightning network.

Hope you all have a great day. I’ll talk to everyone tomorrow.

AK

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