Coinbase, the largest U.S. crypto exchange by trading volume, has formally added support for the Lightning Network, a layer 2 solution that is aimed at enabling quicker and cheaper Bitcoin transactions.
The roll-out that begins today follows an announcement by the exchange seven months ago, saying it will adopt the protocol. The Lightning Network is designed to make Bitcoin more useful by enabling almost instant, low-cost payments as opposed to the frequently slower and more costly traditional on-chain ways.
User Benefits from Lightning Network
Before the integration, Bitcoin transactions on Coinbase were processed only on-chain, which could take about 10 minutes to two hours. As a result, high fees were charged during peak network periods. The Lightning Network runs on top of the Bitcoin blockchain and uses bidirectional payment channels to settle transactions off-chain, hence achieving instant transaction speeds with minimal fees.
⚡We’re thrilled to announce that @Coinbase is rolling out support for the #Bitcoin Lightning Network powered by Lightspark🤝Coinbase customers can instantly send, receive, or pay with Bitcoin on Lightning directly from their Coinbase account. Give it a try yourself in your… pic.twitter.com/bfxA5PMHmN
— Lightspark (@lightspark) April 30, 2024
Viktor Bunin, Coinbase’s protocol specialist, believes that the new integration will boost Bitcoin’s utility and availability worldwide and is a major development in the cryptocurrency ecosystem.
For payments on the Lightning Network, Coinbase has introduced a small charge of 0.1% for sends, which are done in seconds. Initial withdrawal limits are placed at $2,000, with a fee cap of $2 per transaction. These actions are taken to achieve a highly successful payment rate, where some adjustments might be made according to feedback and network liquidity.
Coinbase Partnership with Lightspark
In order to enable this transition, Coinbase teamed up with Lightspark, a company that is focused on Lightning Network infrastructure, with CEO David Marcus, who is known for his previous roles at PayPal and Meta. This partnership highlights the fact that Lightspark concentrates on improving channel liquidity management and routing achievement, while Coinbase works on security and user experience enhancement.
Marcus emphasized that this partnership is very critical since it tremendously enables number of users across the countries to enjoy the fast and cheaper Bitcoin transactions.
Prospects and Industry Standing
Despite the inclusive integration, Coinbase has no immediate plans of adopting the Lightning Network on its wallet or other services but would instead let its performance and adoption rate be critically assessed. The approach is consistent with the bigger industry movement as other main exchanges, such as Bitfinex and Binance, have already adopted Lightning support.
Coinbase’s embrace of Lightning somewhat lags behind some rival practices, a conscious choice that is partly a result of the need to observe the layer 2 protocol ripeness and adoption.
Regarding wider use, the growth of Lightning Network has been quit substantial; it now holds almost 5000 Bitcoins in capacity. However, this number is lower compared to previous peaks influenced by the volatility of Bitcoin prices. As the network’s utility continues to be realized, adoption is expected to grow, supported by ongoing enhancements and increased user confidence in layer 2 solutions.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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