Coinbase has announced the activation of Bitcoin’s Lightning (a second-layer network) on its platform. Bitcoin Lightning Network was created to make Bitcoin transactions easier and less expensive. It establishes off-chain payment channels so users can deal with each other without overloading the primary Bitcoin blockchain.
This technique has received recognition for its ability to lower costs and speed up transactions, making Bitcoin more appropriate for regular transactions. The Lightning Network deployment by Coinbase represents a critical turning point in the company’s efforts to enhance scalability and user experience.
Using the Lightning Network, Coinbase users can send and receive Bitcoin at a reduced cost and faster transaction times than conventional on-chain transactions. Coinbase has partnered with Lightspark, a Lightning Network specialist, and has employed ex-Meta and PayPal senior staff David Marcus as the CEO. The company has explained that the partnership was necessary to ease the transition.
Lightspark will be working on improving routing performance and liquidity management. Coinbase, on the other hand, will make sure that users get a secure and improved performance. Marcus expressed that the partnership is essential to the company because the new product targets a vast customer base from around the world.
By adopting this second-layer approach, Coinbase hopes to improve the usability and accessibility of Bitcoin for daily use. The action might encourage other companies to take a similar approach, likely leading to more innovation in the Bitcoin space.
The introduction of the Lightning network is the opposite of the conventional on-chain system, which is slower yet expensive. Before the introduction and integration, Coinbase now rans all its BTC transactions using the on-chain method; it takes as long as 10 minutes – 2 hours to finish its transaction using the on-chain transaction method.
Lightning Network Operations Set, Minimum Withdrawal at $2,000
Reviewing Coinbase’s on-chain operations shows users experienced high charges during high network traffic. The Lightning Network works on the Bitcoin blockchain and has been described as a bi-directional payment route allowing users to make transactions outside the on-chain network. This operation allows it to perform fast transactions while charging low fees.
Viktor Bunin, Coinbase’s protocol specialist, believes that the new introduction will likely increase the availability and utility of Bitcoin across the globe. He has viewed this development as a significant achievement in the cryptocurrency industry. Coinbase, as of press time, has formally activated a 0.1% nominal fee charge for sending Lightning Network.
Unlike the former on-chain transaction method, these operations facilitate a speedy payment within seconds. Bunin also said that the company set the withdrawal limit at $2,000, while the maximum withdrawal fee is $2 per transaction. The scalability of the Lightning Network is easily noted because of its contribution to reducing congestion on major blockchains.