Coinbase to Finally Join The Lightning Revolution
Coinbase, the biggest crypto exchange in the US, has finally announced its commitment to bolstering Bitcoin’s standing by integrating the much-discussed Lightning Network.
Traditionally, the integration of the Lightning Network (LN) into major exchanges seemed improbable. Leading platforms, such as Coinbase and Binance, had remained tight-lipped on the possibility, with some insiders suggesting that LN integration might not align with the profit motives of these mammoth exchanges.
However, breaking from the mold, Brian Armstrong, Coinbase’s enigmatic CEO, shed light on their strategic pivot, saying,
“We’ve made the decision to integrate Lightning. Bitcoin is the most important asset in crypto and we’re excited to do our part to enable faster/cheaper Bitcoin transactions. Will take some time to integrate so please be patient.”
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Coinbase Under The Microscope
Coinbase’s decision wasn’t made in isolation. Just last month, Viktor Bunin, a Protocol Specialist at Coinbase, delved into the practicalities of Lightning Network integration. This appears to have been triggered by Square CEO Jack Dorsey who questioned Coinbase on why they “continue to ignore bitcoin and lightning?”
To be fair to Armstrong, he responded, saying they were “looking into how to best add Lightning. It’s non-trivial, but I think worth doing,” before hitting back and reminding Dorsey that Coinbase had “onboarded more people to Bitcoin than probably any company in the world.”
Interestingly, this move by Coinbase isn’t wholly unprecedented in the crypto exchange arena. Rewinding to July 17, Binance made waves by announcing its successful integration of the Lightning Network for BTC transactions.
Those frequenting the Binance platform now have the luxury of Lightning payments when dealing with Bitcoin, providing a more streamlined and cost-efficient experience.
What is Lightning Network?
The Lightning Network is often hailed as Bitcoin’s answer to its scalability woes, enabling faster and cheaper transactions. This positions Bitcoin to hold its own against a slew of altcoins that promise faster transactions.
Delving deeper into its workings, the Lightning Network is a “Layer 2” payment protocol that operates on top of Bitcoin. Its fundamental purpose is to address some of the transactional limitations faced by Bitcoin’s original “Layer 1” blockchain.
Rather than changing the core Bitcoin protocol, the Lightning Network adds another layer to it. By doing this, it allows users to create payment channels between any two parties on that extra layer. These channels can exist for as long as required, enabling unlimited transactions between the parties without committing all transactions to the blockchain.
Only after the channel is closed or if a dispute arises will the net amount be settled to the blockchain. This system drastically reduces the load on the primary Bitcoin network, ensuring almost instantaneous transactions at a fraction of a penny.