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Top cryptocurrency exchange Coinbase is rolling out support for the Bitcoin Lightning Network, the company said on Tuesday. Immediately available on both its mobile and desktop platforms, Coinbase users will be able to choose between sending Bitcoin using the Bitcoin mainnet or the Lightning Network.
Launched in 2018, the Lightning Network is a layer-2 protocol built on top of the Bitcoin network. The Lighting Network allows users to move BTC between wallets without needing to interact directly with the Bitcoin blockchain.
Facilitating Coinbase’s integration of the Lightning Network is Los Angeles-based Lightspark. Established in 2022, the company offers enterprise-facing Lightning Network products.
“There are a couple of considerations that we had in mind when determining the best way to add Lighting support,” Coinbase protocol specialist Viktor Bunin told Decrypt.
“The first thing is that we decided to use a non-custodial integration partner, because when you look at Lightning’s design, it does have this optimization component,” Bunin said. “The second thing is that when we think about distribution of duties, it makes sense for Coinbase to focus on the security, and the user experience portion, it makes sense to outsource that.”
Coinbase customers interested in using the Lightning Network can switch between Bitcoin Core and the Lightning Network when entering the amount of Bitcoin they want to send. They will then need to include a Lightning “invoice” address, which would be generated by the receiver.
“Customers will be interacting with Lightning out of our retail exchange, and that is custodial, in the same way that you custody Bitcoin and ETH and other assets with Coinbase,” Bunin said.
“Customers don’t have to run a node, or manage a channel, or worry about liquidity,” he added. “Coinbase and Lightspark manage all these different aspects, and Coinbase manages the keys and security, as we always do.”
San Francisco-based Coinbase had been exploring Lightning Network integration since last fall. The hardest part of getting the Lightning Network integrated with Coinbase, Bunin recalled, was helping the Coinbase team understand how the technology works—particularly in relation to managing channels and fund movements.
“Making sure that everybody throughout the company that was working on this project had a deep understanding of the Lightning Network—how it works and impacts what they are responsible for—was really crucial,” he said.
Although Coinbase met with different Lightning Network providers, Bunin said Lightspark fit the bill, offering all of the features they were looking for.
“We opted for a partner that has a proven track record of working with enterprises on large-scale Lightning deployments, and Lightspark met our high bar for security,” Bunin explained. “They are non-custodial, as I mentioned, and they have a clear vision around how they can continue to support and improve the lightning ecosystem over the long run.”
He said integrating the Bitcoin Lightning Network is ultimately about growing crypto adoption and increasing economic freedom.
“Bitcoin is the most important asset in crypto, and when we think about how do we advance decentralized, permissionless, credibly neutral networks and assets, how do we get the assets on these networks to come as close to one-second, one-cent transfers and transactions as possible, Lightning just made a lot of sense,” Bunin said. “Advancing Bitcoin is something that’s good for Coinbase, good for the industry, and It’s good for the ecosystem, and we’re very proud that we have an opportunity to do so.”
According to Bunin, while the Lighting Network option is available to U.S.-based customers, Canadian and New York residents will not be able to take advantage of the Lightning Network function for now.
Coinbase has meanwhile been locked in a legal battle with the U.S. Securities and Exchange Commission since the agency began investigating Coinbase for allegedly allowing customers to trade unregistered securities in 2022.
In March, a federal judge said the SEC’s lawsuit could move forward, saying the regulator’s argument against the exchange was plausible, dismissing Coinbase’s motion to dismiss.
Looking to swing Congress in crypto’s favor, Coinbase has supported political campaigns aimed at the 2024 U.S. elections. In February, a Coinbase-backed SuperPAC called Fairshake PAC launched a massive ad campaign targeting U.S. Senate candidate Katie Porter, an ally of longtime crypto critic U.S. Senator Elizabeth Warren.
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Source: https://decrypt.co/228680/coinbase-plugs-into-the-bitcoin-lightning-network
