Coinbase, the popular cryptocurrency exchange, is introducing support for the Lightning Network, a Layer 2 protocol that aims to solve scalability issues and enable off-chain, near-instant, low-fee transactions. This move provides Coinbase customers with a faster and more cost-effective option for transferring, receiving, or paying with bitcoin directly from their accounts.
Previously, Coinbase’s bitcoin transfers were conducted on the blockchain, resulting in transaction times of anywhere from ten minutes to two hours and significant fees during peak network activity. However, with the Lightning Network’s bidirectional payment channels, users can now enjoy the benefits of off-chain transactions that don’t require immediate settlement on the base layer.
Viktor Bunin, Coinbase’s protocol specialist and Lightning integration lead, explained that on the Lightning Network, the flat rate base price for transactions is one satoshi, which is the smallest unit of bitcoin and worth less than $0.01. In addition to this, there is a liquidity provider fee, calculated as a percentage of the payment amount. Network node operators have the flexibility to adjust their fees based on the liquidity they lock up.
Bunin also highlighted that Lightning transactions on Coinbase will incur a 0.1% processing cost and should be completed within seconds. However, there will be a withdrawal cap of $2,000 for Coinbase customers at the initial launch, resulting in a maximum withdrawal charge of $2.
In other crypto news, Animoca Brands is making progress with its Bitcoin Open Metaverse Plan.
