This announcement comes after the exchange’s CEO, Brian Armstrong, responded to a tweet by Bitcoin advocate Wicked, who questioned the company’s lack of public comments on the scaling solution.
Armstrong stated that his tweets auto-delete after some months, hence the lack of public comments on the LN. However, he reassured the community that the Lightning Network is a “great” solution that Coinbase will integrate in the future.
While no specific timeline has been provided, this move will align Coinbase with other competitors such as Kraken, Bitfinex, BitStamp, and OKEx that already support the L2 solution.
Lightning Network is a layer 2 network built on Bitcoin that aims to address the cryptocurrency’s scalability challenges. With faster transaction speeds and lower fees, the LN is the most popular L2 solution for Bitcoin.
Many stakeholders, including MicroStrategy’s founder Michael Saylor, have responded positively to Armstrong’s statement. Bitcoin enthusiast Derek Ross commented that adding Lightning support for deposits and withdrawals would be “phenomenal.” However, some remain skeptical, claiming that Coinbase may take too long to integrate the technology.
The Lightning Network is designed to make Bitcoin transactions as fast and cheap as possible, enabling scalability for the cryptocurrency’s blockchain. By offloading some transaction “traffic” to the LN’s layer 2 blockchain, the core Bitcoin blockchain (“layer 1”) can move faster.
Twitter already allows its users to send and receive Bitcoin tips via the Lightning Network. This functionality is available through a Lightning Network-compatible payments app called Strike, which allows Twitter’s 360 million monthly active users to send Bitcoin payments instantly and for free. Other platforms, such as Substack, have also enabled BTC payments since late August.
El Salvador recently made Bitcoin legal tender, with the government’s Chivo wallet being Lightning-compatible, enabling seamless cross-border payments.
Paxful, a peer-to-peer Bitcoin exchange with 1.5 million users in Africa alone, has also announced that it will enable Lightning payments, potentially facilitating fast and cheap Bitcoin payments for millions of users.
The integration with the current regulatory environment
Coinbase’s decision to integrate the Lightning Network is crucial, especially given the current regulatory environment. With many countries clamping down on cryptocurrency exchanges, some have even banned them outright.
Coinbase, which is listed on NASDAQ, is already facing regulatory challenges, with the US Securities and Exchange Commission threatening to sue the exchange if it launches its proposed Lend program.
Integrating the Lightning Network will enable Coinbase to offer faster and cheaper transactions and maintain its competitiveness in the market.
Coinbase’s integration into the Lightning Network ecosystem is a welcome development for the cryptocurrency community. While no official timeline has been provided, the move will enable Coinbase to stay competitive in the current regulatory environment and offer its users faster and cheaper transactions.
By joining other industry players, Coinbase will leverage the unique features of the Lightning Network and enhance its offering to the growing cryptocurrency market.