coinspress.com
Coinbase, the leading US-based cryptocurrency exchange, is introducing support for the Lightning Network starting today.
This integration will offer users a faster and more cost-effective method for sending, receiving, or paying with Bitcoin directly from their accounts.
Previously, Bitcoin transactions on Coinbase were processed on-chain, resulting in wait times of 10 minutes to two hours and high fees during network congestion periods.
The Lightning Network, launched in 2017, operates as a Layer 2 protocol built atop the Bitcoin blockchain. It addresses scalability concerns by enabling near-instant, low-fee transactions off-chain through bi-directional payment channels without immediate settlement on the base layer.
Fees on the Lightning Network consist of a flat rate base fee as low as one satoshi and a liquidity provider fee as a percentage of the payment value. At launch, Coinbase will impose a 0.1% processing fee on Lightning transactions for sends only, with a maximum withdrawal limit of $2,000.
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The integration significantly reduces the cost of sending Bitcoin globally, making it 20 times cheaper than the average 2% fee on credit card transactions and a fraction of the cost of wire transfers.
Coinbase partnered with Lightning Network infrastructure firm Lightspark for the integration, led by CEO and co-founder David Marcus, known for his previous roles at PayPal and Meta.
Lightning Network adoption has witnessed significant growth, with nearly 5,000 bitcoins ($311 million) in total capacity. However, capacity in bitcoin terms has declined by 12.9% from its peak in July 2023, coinciding with Bitcoin’s price increase.