Coinbase has introduced support for the Lightning Network, enhancing the speed and reducing the cost of Bitcoin transactions for its users. This development, announced on April 30, 2024, follows the trend of other exchanges like Bitfinex, Kraken, and Binance, which have already adopted the technology. The Lightning Network, a Layer 2 protocol, operates on top of the Bitcoin blockchain and facilitates instant, low-cost payments.
Technical and Fee Structure Details
Integration by Coinbase enables transactions to commit the regular on-chain transactions that are slow and costly, especially during busy times. The Lightning Network promises transactions to be completed in seconds with far fewer fees than ever before.
The original setup of Coinbase was that a 0.1% fee would be charged for the Lightning sends with a limit of $2,000 for each transaction. This conservative threshold is designed to guarantee that the payment success rate is high, as it may vary depending on the amount of the payment.
Partnership with Lightspark
For the integration, Coinbase joined forces with Lightspark, a company founded by David Marcus, an ex-executive of PayPal and Meta. This collaboration uses Lightspark’s knowledge of liquidity management and transaction routing on the Lightning Network. It aims to improve customer experience through the provision of fast and affordable transaction modalities.
Though Lightning Network capability has been recently added, there are no immediate plans to include this feature in Coinbase Wallet or other Coinbase Commerce services. The company will test the adoption and performance of the Lightning Network among its users for future rollouts.
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