Coinbase (NASDAQ:COIN), a leading cryptocurrency exchange, has announced its plan to incorporate the Lightning Network, an upgrade aimed at enhancing Bitcoin transactions by making them faster and more affordable, according to CEO Brian Armstrong. This move marks a significant shift in stance among top-tier crypto exchanges towards the adoption of the Lightning Network.
The Lightning Network was developed as a solution to Bitcoin's scalability issues, with the goal of placing Bitcoin on par with emerging cryptocurrency systems offering quicker and less costly transactions. Despite initial hesitance among major exchanges like Coinbase and Binance, recent changes suggest evolving industry dynamics.
Armstrong's decision was influenced by a comprehensive study led by Viktor Bunin, a Protocol Specialist at Coinbase, into the feasibility of integrating the Lightning Network. It is important to note that notable figures such as Michael Saylor of MicroStrategy and Jack Dorsey, CEO of Square (NYSE:SQ), had previously expressed concerns about Armstrong's stance on the Lightning Network.
In his announcement, Armstrong acknowledged the central role of Bitcoin in the digital asset space and emphasized Coinbase's commitment to promoting more efficient Bitcoin transactions. He also clarified that the integration process would take some time and called for patience from users.
The news has generated excitement among cryptocurrency enthusiasts as it signifies that Coinbase users will soon be able to experience seamless Bitcoin microtransactions without incurring high costs.
In parallel developments, Binance users who wish to deposit or withdraw Bitcoin now have the option to choose "LIGHTNING" from a menu that also includes options such as BNB Smart Chain (BEP-20), Bitcoin, Ethereum ERC-20, BNB Beacon Chain (BEP2), and BTC (SegWit).
Armstrong had previously unveiled Coinbase’s interest in integrating Lightning last month. In response, Square CEO Jack Dorsey expressed his willingness to collaborate with the exchange in developing a Bitcoin payment system.
The integration of the Lightning Network could potentially disrupt the industry currently dominated by Visa (NYSE:V) and Mastercard (NYSE:MA). By utilizing the Lightning Network, payment processors could undercut the 2-3% transaction fees collected by these dominant networks, which totaled $24B in 2021.
However, it is worth noting that the announcement comes amidst concerns about the US Securities and Exchange Commission’s (SEC) regulatory approach, which some in the crypto industry believe is negatively affecting America's position in the global cryptocurrency market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.