Brian Armstrong, Coinbase CEO, tweeted that the Bitcoin Lightning Network is great and is something that can be integrated with the biggest exchange in the United States. Armstrong’s comment is an answer directed to another Twitter user who is asking why Coinbase is actively ignoring the Lightning Network.
Armstrong’s answer is an indication that the Bitcoin Lightning Network is a great technology that can be utilized by trading platforms. The Lightning Network is known for its cheap transaction cost, scalability, and privacy.
What is the Bitcoin Lightning Network?
The Bitcoin Lightning Network is a layer 2 payment protocol built on top of the BTC chain that enables fast and cheap transactions between participants. These transactions are done without having to wait for confirmation on the main BTC chain. It is based on a network of bidirectional payment channels between users. These channels enable users to conduct an unlimited number of transactions with each other without having to broadcast each transaction to the Bitcoin network. Instead, the transactions are recorded off-chain, and only the final balances are settled on the Bitcoin blockchain
This layer 2 protocol benefits both the user and the Bitcoin blockchain. We have to remember that BTC has a speed of seven transactions per second. In a world where every second counts, that is fast but not fast enough. The Bitcoin Layer Network takes away some transactions from the main chain and processes them off-chain. It takes some load off the main BTC network, while at the same time making gas fees cheaper for users. Below is a short video on how it works
How will Coinbase and Its Users Benefit from Using the Bitcoin Lightning Network?
Centralized exchanges like Coinbase can leverage the Bitcoin Lightning network’s speed and low gas fees. Bitcoin Transactions can sometimes take some time to confirm and can be expensive at times. This can result in long wait times for customers who are trying to deposit or withdraw from their accounts. The wait time can often cause inconveniences for customers. The lightning network solves this.
For example, let’s say Mister Satoshi wants to deposit BTC into his trading account on a crypto exchange. Normally Mister Satoshi would need to pay a high fee and wait for several confirmations before his Bitcoin arrives. However, if the exchange supports Lightning Network deposits, Mister Satoshi can send his Bitcoin to the exchange instantly and with lower fees. The funds would be credited to his account almost immediately, allowing him to start trading right away.
The Marriage of the Lightning Network and Coinbase is Great for Adoption
If Brian Armstrong makes good on his tweet, then this is great news for the crypto community. This is not the first time an exchange would be using the Bitcoin Lightning Network, but Coinbase will possibly be the biggest crypto platform using it.
The Lightning Network is not only used for transferring Bitcoin but is also being used as a payment channel. So this means, that Coinbase’s big customer base will also have the ability to conduct payment transactions without converting to fiat. This can all be done in a cheap, quick, and secure manner. This is what adoption looks like. This is what the crypto community is waiting for. The million dollar prediction for Bitcoin might not be dream at all.
Suggested Readings:
- Cathie Wood and Art Laffer Discuss Bitcoin’s Potential as a Stable Store of Value
- Will Bitcoin Surprise Everyone with a New Record High?
- The Truth About Bitcoin Decoupling from the Traditional Market
Featured Image from Pixabay
