Coinbase CEO Brian Armstrong has officially confirmed that America’s largest crypto exchange is actively working on integrating Lightning Network to help users transact with bitcoin cheaper and faster, two months after rival Binance adopted the layer-2 payment protocol.
The Lightning Network is designed to scale the Bitcoin network by enabling users to conduct transactions off-chain, allowing for faster confirmation times and lower fees. As one of the largest and most widely-used cryptocurrency exchanges in the world, Coinbase’s adoption of the Lightning Network could have a significant impact on the broader adoption and use of this technology.
The team did a great job digging into this, and we’ve made the decision to integrate Lightning. Bitcoin is the most important asset in crypto and we’re excited to do our part to enable faster/cheaper Bitcoin transactions. Will take some time to integrate so please be patient. https://t.co/FneeXkLI25
— Brian Armstrong 🛡️ (@brian_armstrong) September 13, 2023
Responding to a tweet criticizing him by a popular Twitter figure “Wicked,” Armstrong said last month that “Lightning is great and something we’ll integrate”. The Bitcoin enthusiast, who goes by a pseudonym, claimed that Armstrong had been actively avoiding Bitcoin Lightning Network and that he never tweeted about it.
Nevertheless, Coinbase CEO has not provided any additional details on what a Lightning integration with the exchange would entail, or when users could expect to see it implemented. However, Armstrong’s support of the Lightning Network in his recent tweet has sparked speculation that Coinbase could be considering this technology as a way to improve the user experience amid its plans to expand outside the US.
The Bitcoin Lightning Network has already been gaining traction among cryptocurrency exchanges worldwide, but not all major players were rushing to integrate the protocol. While some top platforms, such as BitPay and Kraken, have already adopted the technology, Coinbase and Binance were taking a more cautious approach.
There was speculation on why some of these exchanges have been slow to integrate the Lightning Network. One theory suggests that Lightning’s availability could lead to fewer incentives for users to keep their Bitcoin on these exchanges due to the high cost of withdrawals. As such, the integration would encourage them to frequently transfer their holdings to cold storage, which could reduce their reliance on the exchanges’ centralized wallets. Other possible factors include technical challenges, regulatory concerns, and the need to balance scalability with security.
Lightning Network was introduced in 2018 and has seen increased usage among bitcoin holders in recent years. That trend has risen at a faster pace over the last year as the number of nodes on the network grew by two thirds in 2021.
As the most popular layer 2 scaling solution for Bitcoin, the Lightning Network solves several challenges that prevent the original protocol from being used for micropayments and other transaction types. It also enables payments to be processed faster and more privately than they would natively on the primary coin’s blockchain.