Cash App and Chivo help Lightning Network payments grow by more than 400%

A new report highlights how the Lightning Network is growing in popularity as a way to quickly and efficiently transfer digital assets around the world.

CNBC reported the story of Alena Vorobiova, a Ukrainian refugee who is currently seeking asylum in Poland. Vorobiova used the Lightning Network to transfer $100 worth of bitcoin from Miami, then withdraw the equivalent in Polish currency from an ATM — all within three minutes.

It is this low-cost, high-speed transaction that has seen this Bitcoin layer-2 scaling solution witness a 410% increase in payment volume over the past year.

According to a report published by Arcane Research, the number of payments that occurred on the Lightning Network has doubled over the past year, while the total value of those payments has quadrupled.

The report warns that widely cited public metrics used to measure Lightning Network adoption — most commonly Total Value Locked (TVL) — underestimate the size of the network because they do not account for private channels and invisible nodes. Furthermore, these metrics do not reflect real-world Lightning usage, whereas looking at payment volume explicitly provides a clearer picture of true Lightning adoption.

Part of the reason for the surge in payments is the recent surge in the number of users using the Lightning Network. This is done through Chivo Wallet in El Salvador and CashApp, the US payments app.

Lightning Network Status Report: Arcane Research

According to Arcane estimates, in August 2021, about 100,000 users will be able to use the Lightning Network to pay. As of March this year, more than 80 million people were able to make payments over the Lightning Network, indicating a large potential user base.

The report found that around 50% of the value of payments comes from direct transactions between individuals - peer-to-peer (P2P) transactions. Almost a third of payment value comes from exchange withdrawals and deposits, with the remaining 20% coming from purchases made through some form of vendor.

Although Bitcoin was originally designed as an electronic cash system, the slowness of the Bitcoin network in resolving transactions gave rise to second-layer solutions. Launched in March 2018, the Lightning Network aims to provide faster and cheaper bitcoin transactions.

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