In a matter of weeks, Coinbase constituted a team to dig into the protocol and assess the feasibility of its integration.
Coinbase CEO Brian Armstrong has announced the exchange’s plans to integrate the Bitcoin Lightning Network (LN) into its infrastructure.
LN is a layer 2 payment protocol that was created to improve the scalability of Bitcoin and allow cheaper and faster Bitcoin transactions. Joseph Poon and Thaddeus Dryja proposed the protocol in a whitepaper published in January 2016. The protocol fast-tracks Bitcoin transactions by reducing the load on the Bitcoin network during periods of peak demand.
Interestingly, the proposal struggled to gain traction. Until recently, major exchanges like Kraken, Bitfinex, Binance and Coinbase made no attempts to use it. Members of the community had argued that the network would not boost the exchanges’ income, hence the disinterest.
All that changed when Kraken announced the complete integration of the protocol for BTC withdrawals and deposits in 2022. In July, Binance also announced its integration with the Bitcoin Lightning network. In the midst of this, Block CEO and founder Jack Dorsey questioned Coinbase on its decision to ignore LN. MicroStrategy founder Michael Saylor also queried Armstrong’s position on LN publicly.
Armstrong: Lightning Network Is Worth It
Coinbase CEO Brian Armstrong was quick to correct the notion. Armstrong said:
“We’re looking into how to best add Lightning. It’s non-trivial, but I think worth doing. I’m all for payments taking off in Bitcoin.”
In a matter of weeks, Coinbase constituted a team to dig into the protocol and assess the feasibility of its integration. Protocol Specialist at Coinbase, Viktor Bunin led the team.
“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,” said Armstrong.
However, Armstrong refrained from giving a timeline for the integration. Instead, he cautioned that it would take time and called for patience from its community members.
Adoption by Exchanges Could Lead to Mainstream Adoption
Whereas Coinbase has about 108 million registered users, Binance has about 128 million. Consequently, the adoption of the Lightning Network by these exchanges would mean millions of users get to interact with the protocol for the first time.
With better payment throughput, the integration could lead to greater mainstream Bitcoin adoption.
An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.