Coinbase Formally Incorporates The Bitcoin Lightning Network
Bitcoin was referred to as "the most important asset" by the CEO of Coinbase after it was revealed that it would incorporate Lightning.
Coinbase has opted to include Bitcoin's Lightning Network onto its exchange platform after more than a month of open discussion.
According to CEO Brian Armstrong, his publicly traded company will help develop "faster / cheaper" transactions made possible by the technology.
Armstrong claimed in a post on X, the old Twitter, that "Bitcoin is the most important asset in crypto." The integration's timeline was not specified.
The breakthrough on Tuesday is just another milestone in the long march towards the adoption of bitcoin payments—a key idea initially planned for the 14-year-old cryptocurrency—following in the footsteps of Jack Dorsey's Cash App and David Marcus' Lightspark.
Coinbase Integrates Bitcoin Lightning Network
The layer-2 blockchain known as Lightning is connected to the Bitcoin blockchain. There, transactions can be offloaded for faster and more effective processing, which is necessary if BTC is to have any chance of ever being a widely used payment mechanism.
In essence, Lightning enables two parties to establish a payment channel without having to record each transaction individually on the Bitcoin blockchain.
When it was first designed, it was intended to solve some of the scalability problems with Bitcoin's design, namely high fees and lengthy transaction delays during times of high network activity.
“Bitcoin is the world’s digital monetary system, and Lightning is Bitcoin’s payments layer,” Cathie Wood, the head of Coinbase’s second-biggest shareholder, ARK Invest, wrote on X in response to Armstrong’s post Wednesday.
Although Bitcoin exchanges all around the world have already begun to adopt the Bitcoin Lightning Network, not all of the main players have done so in a hurry. Top platforms like BitPay and Kraken have already included the technology, but Coinbase and Binance have been more circumspect.
The Lightning Network's sluggish integration into some of these exchanges has given rise to rumors. According to one argument, customers may be less inclined to maintain their Bitcoin on these exchanges as a result of the high withdrawal fees if Lightning is made available. As a result, the integration might persuade customers to regularly move their holdings to cold storage, which might lessen their reliance on the centralized wallets of the exchanges.
Technical difficulties, regulatory issues, and the necessity to strike a balance between scalability and security are further potential considerations.
Since its launch in 2018, the Lightning Network has grown in popularity among Bitcoin users. As the network's node count increased by 2/3 in 2021, this tendency has accelerated over the past year.
The Lightning Network, the most widely utilized layer 2 scaling solution for Bitcoin, addresses a number of issues that hinder the original protocol from being used for small-value transactions and other kinds of transactions. Additionally, it makes it possible for payments to be completed more quickly and secretly than they otherwise could on the blockchain of the principal coin.
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