Coinbase, one of the largest BTC exchanges globally, has recently introduced support for the Bitcoin Lightning Network. This update gives Coinbase users the option to choose between Lightning and the traditional Bitcoin network when transferring Bitcoin.
By utilizing the layer-2 Lightning Network, customers can now transfer Bitcoin at a faster and more cost-effective rate compared to transactions on the Bitcoin blockchain. To use the Lightning Network, the recipient provides an invoice with a unique string of characters, which Coinbase recognizes as the transfer amount.
Unlike transfers on the Bitcoin network, which can take anywhere from 10 minutes to 2 hours due to limited transaction processing capacity, transfers on Lightning are almost instantaneous. However, Coinbase has cautioned that sending funds through Lightning to some self-custody wallets may take longer or fail due to different implementations or fee structures.
When sending Bitcoin using Lightning, Coinbase will charge a processing fee of 0.1% of the transfer amount for the sender.
Coinbase has partnered with Lightspark, a Lightning payments solution provider led by former PayPal president David Marcus, for the integration. Marcus described this collaboration as a significant milestone towards their joint objective of offering practical solutions for Internet payments. Lightspark further explained that Coinbase is utilizing a remote-key signing implementation, with Coinbase holding the Lightning signing keys while Lightspark hosts their Lightning node.
Viktor Bunin, a protocol specialist at Coinbase, revealed in a recent post that the consideration of Lightning integration began in August. However, he clarified that Coinbase had been evaluating the network for several years. Bunin expressed his excitement about the integration, stating that it is a significant milestone for the cryptocurrency ecosystem.
Coinbase’s competitors have already incorporated Lightning into their services. Binance added Lightning in July 2023, Kraken implemented it in 2022, and Bitfinex adopted it in late 2019.
In other news, a recent survey found that 68% of Runes are experiencing losses. This raises questions about whether they truly enhance the Bitcoin ecosystem.