Coinbase integrates Bitcoin Lightning Network

Coinbase has announced the integration of the Bitcoin Lightning Network, enabling faster and cheaper Bitcoin transactions.

According to Coinbase’s blog, as of Tuesday, users can access this feature on mobile and desktop platforms and send Bitcoin via the traditional Bitcoin network or the Lightning Network.

The Lightning Network, a layer 2 protocol established in 2018, facilitates transactions off the main Bitcoin blockchain, enhancing speed and reducing costs. Coinbase’s adoption of this technology was supported by Los Angeles-based Lightspark, which was founded in 2022 and specializes in enterprise-grade Lightning Network services.

“Customers will be interacting with Lightning out of our retail exchange, and that is custodial, in the same way that you custody Bitcoin and other assets with Coinbase,” said Viktor Bunin, a protocol specialist and Lightning integration lead at Coinbase. “Customers don’t have to run a node, or manage a channel, or worry about liquidity.”

Bunin detailed the reasons for choosing Lightspark, pointing out its extensive experience implementing large-scale Lightning solutions for businesses and their adherence to stringent security standards. The integration lead also mentioned the importance of Lightspark’s non-custodial services and its ongoing dedication to developing the Lightning ecosystem.

With an integration process that began last fall, Bunin emphasized the importance of educating Coinbase’s team on the nuances of the Lightning Network. The protocol specialist mentioned ensuring that all team members involved in the project thoroughly understood how the Lightning Network functions and its implications for their specific roles.

However, the new service is currently unavailable to residents of Canada and New York. This regional restriction reflects ongoing regulatory challenges, including a legal battle with the U.S. SEC over allegations of facilitating trades in unregistered securities, which emerged prominently in 2022.

Coinbase has also been politically active, supporting campaigns that positively influence crypto regulation. In December, a Coinbase-backed SuperPAC launched a significant ad campaign targeting U.S. Senate candidate Katie Porter, indicating the exchange’s strategic political engagements.

Coinbase’s adoption of the Lightning Network represents a step towards improving the scalability of Bitcoin transactions, aligning with its goal of increasing crypto adoption and economic freedom.

“Bitcoin is the most important asset in crypto […] Lightning just made a lot of sense,” Bunin said.