Coinbase, one of the giants in the crypto world, appears to be considering the integration of Bitcoin’s Lightning Network.
For those not in the know, the Lightning Network is a second-layer scaling solution for Bitcoin, designed to speed up transactions and reduce fees. It has been around since 2018 and celebrated its fifth-anniversary last month.
The network has been steadily growing, with the amount of $BTC locked in Lightning reaching an all-time high of 5,490 BTC in February, before dropping slightly to 5,420 BTC.
The Lightning Network works by creating a separate layer for off-chain transactions. This allows multiple transactions to occur without the need to broadcast them on the main blockchain, reducing network congestion and addressing Bitcoin’s scalability limitations.
Transaction volume on the Lightning Network has also seen a significant increase. BitPay reported an 18% increase in transaction volume in 2022 compared to 2021, with growth in the fourth quarter of 2022 being 32% higher than in the same period in 2021. The network doesn’t have a native token like most protocols, which indicates that its growth is purely organic.
Many major crypto exchanges, including Bitfinex, Kraken, and OKX, have already integrated the Lightning Network. Coinbase’s potential integration would further show the company’s commitment to scaling solutions for the crypto ecosystem. It’s worth noting that Coinbase has been actively engaged with Ethereum L2s, recently launching “Base” on February 23—an Ethereum layer 2 application-focused network powered by fellow layer 2 solution Optimism. This might be one of the reasons behind the delay in integrating the Lightning Network.
While there’s no set timeline for the integration, Armstrong’s tweet has sparked excitement among Bitcoin enthusiasts and Coinbase users alike.
As the industry continues to evolve and expand, it’s crucial for companies like Coinbase to stay ahead of the curve and embrace new technologies. With the Lightning Network integration on the horizon, it looks like Coinbase is doing just that.