Despite major growth in 2021, the Lightning Network still remains a niche product

The Lightning Network, Bitcoin’s scaling solution, has seen unthinkable occurrence past year, increasing some successful capableness and transaction count.

With an exponentially expanding complaint of adoption, Lightning is acceptable to spot adjacent bigger occurrence successful 2022, continuing to pull much and much users.

However, contempt its meteoric growth, Lightning inactive remains mostly a niche product, catering to a precise tiny portion of the Bitcoin market.

Bitcoin’s Lightning Network is yet to go mainstream

While astir of the manufacture was focused connected the maturation of Ethereum’s Layer-2 scaling solutions, the Lightning Network had its champion twelvemonth ever.

Bitcoin’s high-speed payments web saw a immense summation successful usage acknowledgment to respective large integrations.

The astir high-profile implementation of the Lightning Network took spot successful El Salvador aft it became the archetypal state successful the satellite to follow Bitcoin arsenic ineligible tender. El Salvador’s state-developed Chivo wallet has a proprietary Lightning Network node and uses the high-speed outgo web to facilitate low-cost and near-instant transactions.

And portion we’re yet to spot if El Salvador’s Chivo wallet volition basal the trial of time, it acted arsenic a important booster to the usage level of the Lightning Network.

Lightning’s usage was further boosted by 2 different large integrations.

In September past year, Twitter expanded its tipping diagnostic to see Bitcoin. Available to users successful El Salvador and the U.S., the diagnostic enables users to nonstop and person Bitcoin fundamentally for free. For this, Twitter integrated with Strike, a payments exertion built connected the Lightnin Network, which offers instant and escaped Bitcoin payments globally.

Online publishing level Substack enabled a akin diagnostic successful precocious summer, partnering with OpenNode to alteration its 500,000 paying customers to acquisition subscriptions utilizing Bitcoin.

Last week, Mobile payments supplier Cash App has besides announced that it volition present Lightning to its 36 cardinal customers successful the U.S. and the U.K.

All of this has led to the Lightning Network experiencing unprecedented growth. According to information from CoinShares, Lightning has seen its web capacity, node count, transmission count, and mean transmission size each summation importantly passim the past year.

Graph showing the maturation Lightning Network experienced successful 2021 (Source: CoinShares)

In its latest Digital Asset Outlook report, CoinShares said that it expects Lightning to proceed its maturation successful 2022. The institution besides believes that Lightning volition statesman experimenting with caller usage cases and determination beyond conscionable being a high-speed outgo web for Bitcoin.

However, portion the maturation the web experienced was important comparative to its past performance, it inactive remains a niche merchandise successful the crypto market.

CoinShares noted that contempt being astir for 4 years, it inactive caters to a comparatively tiny portion of the market, consisting mostly of hobbyists and entrepreneurs. The underbanked and politically dissident besides correspond a important information of its idiosyncratic base, but a tiny portion of the wide market.

Lightning’s deficiency of popularity successful the mainstream crypto marketplace could besides beryllium caused by Bitcoin itself. The bulk of the marketplace inactive sees Bitcoin arsenic a semipermanent concern and a hedge against inflation, choosing to clasp the plus alternatively of utilizing it for payments.

The emergence of low-cost Layer-2 EVMs has besides made Bitcoin overmuch little charismatic arsenic a means of payment, drastically reducing the portion of the marketplace Lightning is trying to service.

Nonetheless, Lightning’s dilatory and integrated maturation could beryllium positive. The melodramatic maturation galore DeFi and outgo protocols experienced successful the past fewer years ended successful arsenic melodramatic crashes. If Lightning keeps going astatine its dilatory and dependable improvement pace, it has the imaginable to stay an integral portion of the crypto marketplace for years to come.