As a researcher with a background in blockchain technology and digital currencies, I’m excited about Coinbase’s recent announcement of supporting the Bitcoin Lightning Network. Having closely followed the developments in this space, I understand the potential benefits that come with using layer-2 solutions like Lightning for transferring cryptocurrencies.
Coinbase now gives users the option to utilize the Bitcoin Lightning Network for transactions instead of the standard Bitcoin network when transferring Bitcoins (BTC).
As a crypto investor using Coinbase, I can take advantage of the faster and more cost-effective Bitcoin transfers through the Lightning Network. Instead of relying on the Bitcoin blockchain for transactions, this network enables instant and low-cost Bitcoin transfers. To initiate a transfer, I simply request an invoice from the intended recipient, which is represented by a long string of characters that Coinbase can easily identify as the amount to be transferred.
Transactions over the Lightning Network are instantly processed, setting it apart from Bitcoin where transactions can take anywhere between 10 minutes and 2 hours due to the network’s limited transaction processing capacity. However, sending funds from Lightning to certain self-custody wallets may take several hours or may not even go through, according to Coinbase’s warning on April 30, due to individual implementation differences and fee structures.
Coinbase will charge a processing fee of 0.1% of the transfer amount for senders.
Coinbase teamed up with Lightspark, led by ex-PayPal president David Marcus, to implement the Lightning payments solution. This collaboration marks a significant step forward in our mutual mission to deliver effective digital payment options for the web.
On its website, Lightspark described that Coinbase employs “a remote-key signing methodology,” meaning “Lightning signing keys are entirely controlled by Coinbase, while Lightspark manages their associated Lightning node.”
Viktor Bunin, a protocol expert at Coinbase, mentioned in a Reddit thread that the cryptocurrency platform started exploring the possibility of integrating Lightning Network in August. However, he clarified to CryptoMoon that they had been assessing this network for an extended period.
“The key drivers in our decision were the continued growth and adoption of Lightning, maturity of the underlying technology and our goal to get onchain payments down to 1 second and costing 1 cent.”
The integration is “another huge milestone for the ecosystem,” Bunin said.
Coinbase is one of the biggest Bitcoin exchanges globally. Several of its rivals have previously integrated Lightning into their offerings. For instance, Binance implemented Lightning in July 2023, Kraken did so in 2022, and Bitfinex initiated it towards the end of 2019.
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2024-04-30 21:45