The Lightning Network is A Growing Threat to Traditional Payment Systems
Marty Bent highlights the rapid growth of the Lightning Network, arguing that its ability to process transactions at a fraction of traditional payment processing costs makes it a viable alternative to Stripe, Visa, and Mastercard. As Lightning adoption expands, businesses are increasingly incentivized to accept Bitcoin over fiat due to lower fees and instant settlements.
A report from River shows that Lightning Network transaction volume surged by 266% from August 2023 to November 2024, reaching $286.5 million in publicly recorded transactions. This data suggests significant adoption, though actual transaction volume is likely much higher due to private channel settlements between large entities such as exchanges.
Why is this important?
Cost Savings: Businesses are opting for Lightning payments over fiat due to lower transaction fees. Bent shares an example where he avoided a 4% premium by using Lightning instead of a Stripe payment.
Instant Settlements: Unlike credit card transactions, which take days to clear, Lightning transactions are nearly instantaneous.
New Payment Models: The emergence of AI-driven microtransactions and real-time machine payments could be uniquely suited for Lightning’s fast, low-cost transfers.
Lightning vs. Traditional Payment Networks: Visa, Mastercard, and Stripe charge fees that can add up for businesses. Lightning enables near-zero cost transactions.
Growing Adoption Among Businesses: More companies are issuing invoices that offer discounts for Bitcoin payments over Lightning, signaling real-world use cases.
Potential Exponential Growth: As awareness and trust in Lightning grow, adoption is expected to accelerate, potentially eating into market share currently held by traditional payment processors.
Rod Roudi, a business owner, explains that fiat payment options often include a markup to cover Stripe’s processing fees, making Bitcoin the more cost-effective choice. Bent argues that the financial efficiency of Lightning will naturally drive businesses to adopt it over legacy payment systems. River’s report suggests that real transaction volume is likely far greater than publicly recorded numbers, indicating hidden adoption.
If Lightning continues on its current trajectory, it could replace portions of the existing payment infrastructure, reducing reliance on traditional banking networks. More merchants and service providers are expected to offer Lightning payment options, incentivizing customers to use Bitcoin for everyday transactions. As AI-driven applications develop, Lightning’s ability to facilitate microtransactions could unlock entirely new economic models.
