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As mentioned in Coinbase's blog post, "Adding support for Lightning furthers the growth of the crypto ecosystem by increasing everyday utility for millions of Coinbase customers."
Crypto exchange Coinbase has finally rolled out support for the Lightning network in collaboration with Lightspark. This will provide clients with a faster and cheaper method to send, receive, or pay with BTC straight from their accounts.
The integration follows several months after Coinbase confirmed its decision to incorporate the Lightning protocol, aligning with industry rivals such as Bitfinex, Kraken, and Binance.
Previously, BTC transactions on Coinbase were processed on-chain, which involved wait times ranging from a few minutes to a couple of hours in case of network congestion. Additionally, these on-chain transactions were also prone to high fees in case of heavy traffic.
With Lightning transactions on Coinbase incurring a 0.1% processing fee for sends only, users can expect faster processing times, with transactions settled within seconds. Currently, Coinbase has implemented a withdrawal limit of $2,000 to optimize user experience and ensure payment success rates.
In addition to reducing transaction costs, Coinbase's Lightning Network integration positions Bitcoin as a viable alternative to traditional payment methods. According to Coinbase's claims, the cost of sending Bitcoin globally will be 20 times lower than the average 2% fee charged on credit card transactions and a fraction of the $30 fee for wire transfers.
The adoption of the Lightning Network, a layer 2 protocol launched in 2017, addresses these challenges by enabling near-instant, low-fee transactions off-chain via bi-directional payment channels.