We show that usage of the Lightning Network is associated with reduced mempool congestion in Bitcoin and with lower fees. Our findings suggest that the off-chain netting benefits of the Lightning Network can help Bitcoin to scale and function better as a means of payment. Centralization of the Lightning Network does not appear to make it much more efficient, though it may increase the proportion of low fee transactions.
Data are not available on how Bitcoin is used, so we cannot say for sure whether Bitcoin is being increasingly used as a means of payment. Makarov and Schoar (2021) study blockchain data and conclude that the majority of usage is for trading and speculative purposes, but their analysis does not extend to transactions that take place on the Lightning Network. We can only say that the Lightning Network loosens a key technological constraint by allowing payments to be settled more quickly