Coinbase has introduced support for the Bitcoin Lightning Network, giving users the option to choose between Lightning and the Bitcoin network when transferring BTC. By utilizing the layer-2 Lightning Network, Coinbase customers can now transfer Bitcoin faster and at a lower cost compared to transactions on the Bitcoin blockchain. To utilize the Lightning Network, the recipient sends an invoice containing a long string of characters that Coinbase recognizes as the transfer amount.
Transfers on the Lightning Network are considered “instant,” in contrast to Bitcoin network transfers, which can take anywhere from 10 minutes to 2 hours due to the limited number of transactions processed per second. However, Coinbase cautioned that transfers to certain self-custody wallets via Lightning may take several hours or fail due to unique implementations or fee structures.
For senders, Coinbase will charge a processing fee of 0.1% of the transfer amount. The integration of Lightning into Coinbase’s platform was made possible through its partnership with Lightspark, a Lightning payments solution provider led by former PayPal president David Marcus. Marcus referred to the partnership as a significant milestone in their joint mission to offer practical solutions for internet payments.
Coinbase protocol specialist Viktor Bunin revealed that the cryptocurrency exchange had been considering Lightning since August. However, he clarified that they had been evaluating the network for several years. Bunin described the integration as a monumental achievement for the ecosystem.
As one of the largest BTC exchanges globally, Coinbase follows in the footsteps of its competitors who have already incorporated Lightning into their services. Binance integrated Lightning in July 2023, while Kraken added it in 2022, and Bitfinex did so in late 2019.