Coinbase is advancing its efforts to incorporate the lightning network, partnering with a company led by a renowned figure from the payments industry to achieve this.
The leading U.S. cryptocurrency exchange, Coinbase, has announced its collaboration with Lightspark, a provider of lightning network infrastructure, to facilitate the integration of this technology. Lightspark is guided by David Marcus, a co-founder of PayPal.
Coinbase to Integrate Lightning Network
Lightspark revealed on Wednesday that its technology would enable Coinbase users to benefit from “instant” and “more affordable” Bitcoin transactions, setting the stage for further collaborations on lightning network projects with Coinbase.
The lightning network, a secondary layer on Bitcoin’s blockchain, permits users to execute transactions instantaneously, bypassing the usual ten-minute wait for transaction batches on the network to be confirmed.
This network also circumvents the high fees associated with the primary Bitcoin blockchain, making it prohibitable for small transactions during peak usage times.
However, the lightning network has its challenges, such as liquidity requirements for large transactions and the ability to receive payments while offline, which can make it cumbersome compared to traditional Bitcoin wallets.
Lightspark claims that its services significantly simplify the process of sending and receiving payments on the lightning network.
The company introduced “Lightspark Predict,” an AI-driven mechanism that dynamically optimizes liquidity and routing to enhance transaction success rates and completion times across the network.
Lightspark aims to transform the lightning network into a “universal money protocol on the internet,” facilitating the movement of fiat currencies via Bitcoin’s infrastructure. David Marcus, Lightspark’s CEO, has expressed a belief contrary to many Bitcoin enthusiasts, suggesting that BTC is unlikely to become widely used for payments.
Coinbase and Lightning: Following the TrendWhile Coinbase will retain control over its lightning network wallet, Lightspark will oversee the operation of the exchange’s node.
Lightspark anticipates that integrating lightning network capabilities across all Coinbase platforms will significantly boost network activity, especially crucial as Bitcoin’s price and transaction fees on the first layer increase.
Coinbase first voiced intentions to adopt the lightning network in August, acknowledging the complexity of finding an optimal integration method. This announcement came amid criticisms from Block CEO Jack Dorsey, who accused Coinbase of overlooking Bitcoin’s secondary layer solution.
Other prominent exchanges, such as Kraken and Binance, have already adopted the lightning network. Binance expedited its integration following withdrawal bottlenecks caused by congestion from Bitcoin Ordinals in May 2023.