Bitcoin Lightning Network is 1000 times cheaper than Visa and MasterCard: Data
Fresh data from Glassnode shows that Bitcoin’s (BTC) Lightning Network is significantly cheaper to use than older payment networks.
The median fee rate, or the cost of sending value over the Lightning Network, is 0.0029%, 1,000 times cheaper than MasterCard or Visa payment processors.
James Check, lead analyst at Glassnode, told Cointelegraph that the median fee rate, or the fee charged per 1 BTC sent over the Lightning Network, is currently 3,000 Satoshis (the smallest unit of Bitcoin). That is “equivalent to $0.84 to send a value of $28,800 […] which is a fee of 0.0029%.”
“Pretty remarkable when you think about it.”
In a post on Nostr’s social media protocol, Bitcoin analyst Dylan LeClair noted that this price is many times lower than that charged by major credit card companies.
The Lightning Network, a layer-2 payment solution built on top of the world’s largest cryptocurrency, was first proposed as a way to make Bitcoin efficient as a payment method. These data points show that it’s not only fast, but also cheap, with the average fee rate steadily declining since November 2021.
Legacy payment networks such as Visa and Mastercard charge merchants a fee of around 2-3% per transaction, making them an expensive option for businesses. In an upcoming Cointelegraph documentary on Cape Verde, the business owner of one of the few businesses that accepted Bitcoin explained that accepting foreign Visa and Mastercard costs over 8%.
Also, Glassnode’s check referred to users running their own nodes and managing their own channels. Many Lightning users use escrow wallets, such as Wallet of Satoshi and Alby, to make micropayments on social media apps such as Nostr.
Some Bitcoin early adopters have noted the growing preference for custodial solutions (as the Bitcoiner mantra is “not your keys, not your coin”), although semi-custodial solutions such as Fedi and Cashu may undermine reliance on full custodial solutions.
Related: MicroStrategy’s Saylor combines work email with Bitcoin Lightning
Furthermore, the throughput of the Lightning Network can be called into question. Check explained:
“Of course, we also have to consider that the typical channel is less than 1 BTC. The median channel size is 0.02 BTC and the mean is 0.08 BTC, so overall the Lightning Network is still well suited for payments under $1000.”
In the graph below, channel size is trending higher, but still well below $10,000. In such an environment, payments above $1,000 may be better suited to the Bitcoin basechain to avoid payment errors or misfires.
Related: Bitcoin in Senegal: Why is this African country using BTC?
