The Bitcoin Lightning Network Is Collapsing - End Of The Lightning?

The Bitcoin Lightning Network, once at the forefront of the crypto revolution, seems to have lost its edge. Once hailed as the future of fast and low-cost payments, it now faces a steep decline in usage. In 2021, everything seemed promising, but today, it appears the spark is fading. Amid increasing disinterest and declining metrics, the Lightning Network faces numerous challenges. But what exactly happened?

The Lightning Network Losing Steam 

The Lightning Network, this second-layer solution developed to speed up Bitcoin transactions, and once showcasing a meteoric rise, is experiencing a significant drop in activity. The network’s total capacity dropped from a peak of 5,308 BTC in July to just 1,273 BTC today. 

And that’s not all: nodes and channels have also dwindled. In other words, fewer participants and thus a less attractive network.

Some blame Michael Saylor, a staunch Bitcoin advocate, but rather reluctant to use it as a medium of exchange. Yet, he rewarded viral memes via the Lightning Network in 2022.

“By constantly saying that Bitcoin as MoE is a distraction, Michael J. Saylor has contributed to the growing disinterest in the Lightning Network“, accuses Sylvain Saurel. 

By repeating that Bitcoin as an MoE is a distraction, Michael J. Saylor has contributed to the growing disinterest in the Lightning Network.

This is a shame because, with his audience, Michael J. Saylor could have encouraged the development of the Lightning Network, which is… pic.twitter.com/TXum82E1Pc

— Sylvain Saurel (@ssaurel) September 19, 2024

Can we really blame one person for this massive decline?

– Lightning Network capacity plummeting:

•   July 2023: 5,308 BTC ;
•   Today: 1,273 BTC ;
•   Fewer nodes, fewer channels, fewer users.

Bitcoin Continues to Attract Despite Everything

However, let’s not rush to write Bitcoin’s obituary. The use of BTC as a means of payment continues to find takers. Last month, Louisiana allowed its citizens to settle certain state services via the Lightning Network.

A notable advance, according to John Fleming, state treasurer, who sees it as a way to “provide flexibility and freedom in interacting with public services“. 

And what about Donald Trump, the first American president to pay for cheeseburgers in Bitcoin during his visit to a bar in New York? Not too shabby for a supposedly dying technology!

The Bitcoin network, despite everything, shows signs of vitality. The number of active addresses reaches 10.7 million, according to Artemis, an indicator of the network’s good health. Even though enthusiasm for NFTs has waned a bit, Bitcoin remains the third blockchain for NFT sales, just behind Ethereum and Solana.

In conclusion, almost a year ago, the growth of the Lightning Network was reaching new heights with a growth of 1,212% in two years.