Coinbase has initiated support for the Bitcoin Lightning Network, allowing users to seamlessly transmit Bitcoin via Lightning or the Bitcoin network.
The layer-2 Lightning Network enables Coinbase clients to transmit Bitcoin at a lower cost and in a more practical manner than transactions conducted on the Bitcoin blockchain.
To utilize the Lightning Network, the intended recipient must transmit an invoice comprising an extensive sequence of characters, which Coinbase will identify as the transfer amount.
In contrast to the Bitcoin network, where transfers may take 10 minutes and 2 hours due to the limited number of transactions processed per second, Lightning transfers are “instant.”
Coinbase cautioned on April 30 that “transfers via Lightning to certain self-custody wallets may experience delays of several hours or fail as a result of atypical implementations or fee structures.”
Senders will incur a processing fee of 0.1% of the transfer amount from Coinbase.
For the integration, Coinbase selected Lightspark, a provider of Lightning payments solutions. Former PayPal president David Marcus, who leads this organization, referred to the partnership as “a critical turning point in our mutual pursuit to deliver authentic solutions for online payments.”
Lightspark elucidated on its website that Coinbase employs a “remote-key signing implementation” in which Coinbase holds the complete set of Lightning signing keys. At the same time, Lightspark operates and hosts their Lightning node.
Coinbase protocol specialist Viktor Bunin stated in an X post that the cryptocurrency exchange began contemplating Lightning in August. Still, he added that the exchange had been evaluating the network for years in a statement and that they had:
“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.”
Bunin described the integration as “another enormous milestone for the ecosystem.”
Coinbase is one of the largest Bitcoin exchanges in the globe. Already, many of its rivals have integrated Lightning into their services. Bitfinex and Kraken added Lightning in late 2019, whereas Binance said it in July 2023.
