Coinbase, one of the major cryptocurrency exchanges, is removing native payments in Bitcoin from its merchant’s platform. The announcement was made by Lauren Dowling, head of product at Coinbase Commerce, through X (Twitter).
The operational difficulties, such as cryptocurrency price fluctuations risk, manual reconciliation of incorrect remittances, and limited range of supported currencies, led the company to look for other approaches. Therefore, they have decided to create an open on-chain payment protocol built on top of smart contracts and Ethereum Virtual Machine (EVM) tools, to simplify on-chain trade.
Dowling said:
We saw an opportunity to build an open onchain payments protocol leveraging smart contracts and other EVM tools to enable seamless onchain commerce without the operational and financial burdens of the old system.
Every customer using the self-storage EVM wallet can employ it as a payment method in the new system. Efficiency is underscored on this platform by enabling quick checkouts via native assets or ERC-20 tokens on Layer2 solutions. Moreover, clients have an opportunity to make their payments using assets that are maintained at Coinbase, which include Bitcoin, Litecoin, and Dogecoin.
This upgraded Commerce product will push payment details on-chain, support a broad range of assets across different networks like Base, Polygon, and Ethereum, among others, and automatically convert payments into USDC stablecoin at a fixed conversion rate for merchants.
Coinbase Faces Backlash
This decision, however, was not taken lightly by the Bitcoin community. Joe Nakamoto, an independent commentator on Bitcoin, expressed his disappointment and instead advocated for the integration of the Bitcoin Lightning Network (LN). The merchant transactions in developing countries are said to have been widely adopted through LN as reflected in Nakamoto’s personal experiences across regions.
Therefore, Nakamoto pointed out that Coinbase’s approach was ineffective and proposed that it would have been more meaningful if the company had given priority to Layer 2 solutions of bitcoin, particularly in light of limited access to finance.
Other members from the community also made similar remarks cautioning Coinbase on its profit-driven objectives rather than considering the ethos of cryptocurrency. Some even accused the company of abandoning its original mission and warned that this could result in reduced market share as well as a lack of trust among users. There were many appeals for the adoption of bitcoin layer 2 solutions like lightning network with users suggesting their alternative payment processors such as BitPay.
Coinbase is currently under fire and may need to rethink its plan as it relates to the wider aims of the cryptocurrency community. However, the termination of Bitcoin as a means of payment by Coinbase represents a shift in its way of doing cryptographic commerce, but the full effects are not yet clear.