A Fidelity Digital Assets Report on Bitcoin’s Scaling Solution

A Fidelity Digital Assets report indicates that Bitcoin’s primary scaling solution is growing at roughly twice the rate shown by public data because much of its network activity remains private.

The Lightning Network Is Growing and Institutions Are Taking Notice

The total capacity of Bitcoin’s Lightning Network has jumped 384% since 2020, with more institutions joining the BTC movement, according to a recent report by Fidelity Digital Assets, part of Fidelity Investments, which manages over $15 trillion.

Daniel Gray, Fidelity Senior Digital Asset Research Analyst, collaborated with Bitcoin infrastructure firm Voltage on the report. It depicts a maturing network that, while stable for some institutional use, needs further refinements before it can operate at full capacity.

In 2018, using Lightning to buy a coffee with Bitcoin had a 50% success rate. At that time, Lightning’s capacity was a mere $1.9 million, with only 2,329 nodes. As of January 2025, Fidelity’s report reveals that small transactions now have a 95% success rate, with the network’s total capacity soaring to approximately $509 million (5,358.50 BTC) across nearly 17,000 nodes.

> “It is worth noting that this capacity does not include private or unannounced channels,” Gray explained. This suggests that actual capacity could potentially double the reported figure.

Other Key Metrics

Private Lightning metrics can be estimated by analyzing data from infrastructure firms like Voltage, which provided Fidelity access to anonymized user data.

Fees

The report outlines that Lightning fees can vary widely, mainly due to the number of nodes a transaction must traverse, known as “hops.” Interestingly, transaction size doesn’t directly affect costs; however, more hops increase the fees. Typically, a $1,000 transaction costs between $0.39 and $1.27, a fraction of a percent.

Speed

While the size of transactions does not impact cost, it does affect execution speed. A significant critique of Lightning is its need for channel capacity before transactions can be routed. Inbound and outbound liquidity indicate the ability to send or receive funds. To receive funds, one must possess funds, which complicates larger payments that require nodes with adequate inbound liquidity.

Gray noted, “Almost all transactions below one million sats finalize in less than one second.” Conversely, larger transactions take an average of 7.64 seconds.

Success Rate

Previously, the success rate for using Lightning to buy a coffee was just 48%. That figure has dramatically improved, with Lightning payments now achieving success rates between 75% and 95%. Gray explained that a 99%+ success rate is achievable with proper configurations, such as payment retries.

While Gray is optimistic about Lightning’s adoption, it remains a work in progress. He likened its current state to the Internet’s evolution from dial-up to cable. Many hope the Lightning Network will advance its technological capabilities, paving the way for significant financial innovation in banking and payment processing. Gray concluded, “For Lightning to be truly effective, users need Lightning payments to work 100% of the time.”