Coinbase, the largest crypto exchange in the United States by trading volume, has initiated support for the Lightning Network starting today, marking a significant step towards enabling faster and more cost-effective bitcoin transactions for its users. The integration follows seven months after Coinbase confirmed its decision to incorporate the Lightning Network protocol, aligning with competitors like Bitfinex, Kraken, and Binance.
Previously, bitcoin transfers on Coinbase were processed on-chain, leading to transaction times ranging from 10 minutes to two hours and incurring high fees during network congestion periods. The Lightning Network, introduced in 2017, operates as a Layer 2 protocol built atop the Bitcoin blockchain. It addresses scalability concerns through bi-directional payment channels, facilitating near-instant and low-fee transactions off-chain without immediate settlement on the base layer.
Viktor Bunin, the protocol specialist and Lightning integration lead at Coinbase, conveyed his excitement about the launch, noting that the increasing adoption of Bitcoin contributes to economic freedom globally. He expressed his satisfaction with the live implementation of the Lightning integration, emphasizing its role in enhancing the utility and accessibility of Bitcoin on a global scale.
Fees on the Lightning Network comprise a flat rate base fee as low as one satoshi (the smallest unit of bitcoin, equivalent to less than $0.01) and a liquidity provider fee or fee rate as a percentage charged on the payment value. Coinbase applies a 0.1% processing fee for Lightning transactions on sends only, with transactions expected to be processed within seconds. Initially, users will be limited to withdrawing a maximum of $2,000, resulting in a maximum withdrawal fee of $2, a conservative measure aimed at enhancing user experience.
In a statement, Coinbase asserted that its Lightning Network integration reduces the cost for users to send bitcoin globally, claiming it is 20 times lower than the average 2% charged on credit card transactions and a fraction of the $30 incurred for wire transfers.
The collaboration with Lightspark, a Lightning Network infrastructure firm led by CEO David Marcus, underscores Coinbase’s commitment to offering innovative solutions for internet payments. Marcus hailed the partnership as a pivotal milestone, enabling millions worldwide to access fast and affordable Bitcoin transactions.
While the Lightning Network integration initially targets specific regions, Coinbase plans to expand support based on user feedback and network liquidity. Although Lightning support for Coinbase Wallet and other services is not currently planned, the team remains open to future integration opportunities as Lightning adoption grows.
Coinbase’s decision to incorporate Lightning Network support follows a thorough evaluation of the protocol’s growth and maturity, emphasizing the company’s dedication to enhancing economic freedom through Bitcoin adoption. With Lightning Network adoption on the rise, the collaboration between Coinbase and Lightspark signals a significant advancement in the scalability and accessibility of Bitcoin transactions globally.
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Source: https://cryptocurrencynews.com/coinbase-adds-lightning-network-support-with-lightspark/
