Bitcoin’s (BTC) growing adoption as an investment product has been solidified in 2024, especially with the launch of spot exchange-traded funds (ETFs). These ETFs have opened doors for traditional investors, marking a significant milestone in the cryptocurrency’s journey toward mainstream recognition. Yet, despite Bitcoin’s success as a store of value, its performance as a payments method has been less promising, particularly in the realm of the Lightning Network.
Decline In Lightning Network Activity
The Lightning Network, Bitcoin’s Layer 2 scaling solution designed to facilitate fast, secure, and low-cost transactions, has seen a worrying decline in usage. Data from Bitcoin Visuals reveals that the Lightning Network’s capacity has plummeted from its all-time high of 5,308 BTC in July 2023 to a mere 1,273 BTC. Alongside this, the number of active nodes and channels on the network has also significantly dropped, signaling a sharp reduction in user activity and network engagement.
This decline has not gone unnoticed within the Bitcoin community, sparking debate among enthusiasts and industry experts. Prominent Bitcoiner Sylvain Saurel has pointed fingers at Michael Saylor, Executive Chairman of MicroStrategy, blaming his promotion of Bitcoin as a long-term store of value for overshadowing its utility as a means of exchange. The controversy highlights a growing division in the Bitcoin space: should Bitcoin focus solely on being “digital gold,” or should it still pursue its original vision as a peer-to-peer currency?
Louisiana’s Bold Move
Despite the decline in Lightning Network activity, Bitcoin’s use case as a means of payment isn’t entirely fading. In a move to embrace cryptocurrency for state services, Louisiana has announced that residents can now pay for state-related services using Bitcoin via the Lightning Network. State Treasurer John Fleming noted that this aligns with Louisiana’s plan to stay at the forefront of evolving technologies. This regulatory support adds legitimacy to Bitcoin as a payment tool, even if its use hasn’t gained widespread traction.
Trump Embraces Bitcoin Payments
Adding to the recent buzz around Bitcoin payments, former U.S. President Donald Trump made headlines when he became the first U.S. President to make a public purchase using Bitcoin. On September 18, Trump reportedly purchased cheeseburgers at a Bitcoin-themed bar, PubKey, in New York City, using BTC. While symbolic, this moment underscores the gradual yet persistent mainstream adoption of Bitcoin as a means of exchange.
Despite challenges in payments and Lightning Network usage, Bitcoin continues to show signs of network health. Data from Artemis indicates that Bitcoin’s monthly active addresses have been steadily increasing, now reaching 10.7 million. This rise in active addresses suggests growing participation on the network, even if much of the activity may be driven by trading rather than transactions.
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Bitcoin’s foray into the world of non-fungible tokens (NFTs) hasn’t been smooth sailing either. According to CryptoSlam, Bitcoin ranks as the third-largest blockchain by NFT sales volumes, trailing behind Ethereum [ETH] and Solana [SOL]. However, the past 30 days have seen a sharp 46% decline in Bitcoin-based NFT sales, dropping to $55 million. This decrease mirrors the broader downturn in the NFT market, highlighting volatility across multiple sectors in the cryptocurrency space.
As Bitcoin continues its dual role as a store of value and a means of exchange, the path forward remains unclear. While its investment appeal is stronger than ever, the weakening activity on the Lightning Network raises questions about its viability as a global payment method. However, landmark moments like Trump’s BTC purchase and Louisiana’s adoption of Bitcoin for state services show that the narrative of Bitcoin as a currency is far from over. How the cryptocurrency balances these dual roles in the future will be crucial for its long-term adoption.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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