Coinbase announced its integration with the Lightning Network via partner firm Lightspark, paving the way for faster and more affordable Bitcoin transactions. This collaboration is a step forward over traditional payment systems, which are often riddled with a sluggish and costly user interface. According to a report, in 2022 alone, U.S. consumers spent $75 billion in credit card transaction fees, with many transactions taking days to process.
In contrast, the Lightning Network on Coinbase, a system built atop the Bitcoin network, enables instant off-chain Bitcoin transfers at substantially lower costs than traditional methods. Typically, credit card companies charge around 2% per transaction, and wire transfers can cost up to $30. However, with the Lightning Network, the cost of sending BTC globally via the trading platform is reduced by a factor of 20 compared to these traditional fees.
Coinbase’s partnership with Lightspark to incorporate the Lightning Network dates back two years, when the LN technology generated a lot of hype. While notable crypto advocates like Michael Saylor and Jack Dorsey welcomed LN with open arms, Coinbase’s reluctance drew attention. The latest move is particularly significant for its customers, who until now faced bitcoin transfer delays ranging from 10 minutes to 2 hours and high transaction costs on the platform.
Coinbase Commits to Crypto Accessibility
Since its launch in 2017, the Lightning Network has seen consistent growth in adoption, driven by the increasing demand for more efficient payment solutions among Coinbase’s user base. This integration means that users can now send, receive, or pay with Bitcoin instantaneously and at a fraction of the cost, directly from their Coinbase accounts.
While this integration marks a significant step forward in supporting the Bitcoin ecosystem and promoting its everyday utility, the exchange acknowledges that the Lightning Network feature is not yet available in all regions, and the cost advantages may vary depending on the nature of the transfer. Nonetheless, Coinbase remains dedicated to revolutionizing the traditional financial system with blockchain technology, focusing on reducing unnecessary fees and settlement delays, thereby expanding access to financial tools for underbanked and unbanked communities worldwide.