Coinbase Collaborates with Lightspark to Improve Bitcoin Transactions via Lightning Network

Coinbase, the leading cryptocurrency exchange in the US by trading volume, has started support for the lightning network starting today. This development introduces a faster and more cost-effective method for its users to transact with bitcoin. Users now have the option to send, receive or make payments in bitcoins directly from their accounts, mirroring the capabilities provided by other exchanges such as Bitfinex, Kraken and Binance.

Coinbase Launches Lightning Network Support to Improve bitcoin Transactions

Historically, transactions on Coinbase required on-chain processing, which could take anywhere from ten minutes to two hours and incur substantial fees during periods of increased network activity. Lightning Network, established in 2017 as a Layer 2 protocol on top of the bitcoin blockchain, was designed to alleviate scalability challenges. It achieves this through two-way payment channels that facilitate instant transactions with minimal fees, without the need for immediate settlement on the blockchain.

Viktor Bunin, Coinbase protocol specialist and Lightning integration lead, expressed his excitement about the launch. He commented that,

The growing adoption of bitcoin increases economic freedom globally. I'm delighted that our Lightning integration is available to make bitcoin more useful and accessible around the world.

This integration, according to Bunin, marks an important milestone in improving the efficiency of btc payments through its partnership with spark of light.

A faster and more cost-effective way for users to send, receive and pay with bitcoin

Lightning Network fees comprise a minimum base fee of one satoshi (the smallest bitcoin unit valued at less than a cent) and a variable liquidity provider fee. Node operators have the discretion to set their fees, balancing the need to compensate for the liquidity they lock up. Bunin revealed that Coinbase imposes a modest 0.1% processing fee for Lightning transactions, which complete in seconds. Initially, withdrawals are capped at $2,000, which translates to a maximum fee of $2. Bunin explained that this conservative limit is intended to ensure high payment success rates, which typically decrease as transaction sizes increase.

In terms of cost effectiveness, the integration significantly reduces the expense of global bitcoin transfers through Coinbase, now 20 times less than the typical 2% fee on credit card transactions and considerably less than the $30 typically charged for bank transfers. Although the Lightning option is not available in all regions, Bunin noted that support is being rolled out selectively based on specific cases.

Coinbase and Lightspark Partnership: Improving crypto Transactions with Lightning Network

For the technical aspect of integration, Coinbase partnered with Lightspark, a firm specializing in Lightning Network infrastructure, led by CEO David Marcus, a former PayPal and Meta executive. The decision to collaborate was announced on April 3, and Marcus highlighted it as an important step for the Lightning Network. Bunin emphasized the benefits of choosing a non-custodial integration partner like Lightspark, which focuses intensely on optimizing channel liquidity management and routing success rates, allowing Coinbase to focus on protecting users' assets and improving the user experience.

Despite the integration, there are no immediate plans to add Lightning to Coinbase Wallet or other services, Bunin confirmed. The decision will depend on network growth and user adoption. He commented on the comparative adoption rates of Layer 2 protocols, noting significant traction in ecosystems outside of bitcoin, and projected an overall increase in Layer 2 usage as consumers seek faster, cheaper transaction options. .

The reason for the delay in Coinbase Lightning Network integration support

Coinbase's launch of Lightning Network support follows several of its competitors, with Bitfinex introducing support in 2019, OKX in 2021, Kraken in 2022, and Binance in July 2023. Bunin explained that the timing of Coinbase's integration was influenced by the need to observe the technological growth and maturity of Layer 2 before adoption.

This strategic move by Coinbase aligns with its mission to improve economic freedom around the world by facilitating more accessible and efficient bitcoin transactions, signaling a strong future for bitcoin utility and adoption.

<blockquote class="twitter-tweet” data-width=”550″ data-dnt=”true” wp_automatic_readability=”9.6652719665272″>

Starting today, support for Lightning Network via twitter.com/lightspark?ref_src=twsrc%5Etfw”>@luzparque will begin to be implemented.

Enjoy instant, low-cost btc transfers.

Learn more: https://t.co/6YPiWgIyyf pic.twitter.com/ufOhO7Qe7i

– Coinbase (@coinbase) twitter.com/coinbase/status/1785309426691273092?ref_src=twsrc%5Etfw”>April 30, 2024

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