New data from Glassnode has revealed that Bitcoin’s Lightning Network is much cheaper than traditional payment networks like Visa and Mastercard. According to Glassnode, the median fee rate for the Lightning Network is 0.0029%, which is 1,000 times cheaper than that of the major credit card companies, media reports said.
According to James Check, the lead analyst at Glassnode, the current fee for sending 1 BTC across the Lightning Network is 3,000 Satoshis, equivalent to a fee of 0.0029% or $0.84 to send $28,800 worth of value. This is equivalent to $0.84 to send $28,800 worth of value, resulting in a fee of just 0.0029%. This low fee rate is many times less than what is charged by Visa and Mastercard.
The Lightning Network is a layer-2 payments solution built atop the world’s largest cryptocurrency, Bitcoin. It was designed to make Bitcoin more effective as a payment method, and these new data points demonstrate that it is not only fast but also low-cost. The median fee rate on the Lightning Network has consistently decreased since November 2021, while traditional payment networks like Visa and Mastercard charge merchants exorbitant fees of approximately 2-3% per transaction, rendering them costly alternatives for businesses. In comparison, the Lightning Network offers a much more affordable solution.
It’s worth mentioning that most channels on the Lightning Network have a size smaller than 1 BTC, with the median channel size at 0.02 BTC and the mean at 0.08 BTC. This makes the network ideal for transactions below the $1,000 mark. For payments over $1,000, it may be better to use the Bitcoin base chain to avoid payment failure or misfire.
Despite this limitation, the Lightning Network remains a popular payment solution, with many users taking advantage of custodial wallets to make micropayments on social media apps such as Nostr. While some early Bitcoin adopters prefer fully-custodial solutions, semi-custodial options like Fedi and Cashu could help to undermine this reliance.
