Bitcoin Lightning Network may receive a much-needed boost thanks to…
- Coinbase CEO talks about plans to integrate the exchange with the Lightning Network.
- A look at the main reason why the Lightning Network is not so attractive to WEB3 developers.
Coinbase CEO Brian Armstrong recently confirmed plans to implement Bitcoin’s [BTC] Lightning Network into its exchange. Layer-2 networks on Ethereum are quite popular and have been growing rapidly. Bitcoin’s Lightning Network on the other hand has not received as much attention.
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Armstrong confirmed the plans to implement the Lightning Network on Coinbase in response to former Twitter CEO Jack Dorsey’s query about it. But why is this such a considerable deal for the Bitcoin community?
Well, Coinbase is one of the largest crypto exchanges in the world. Many crypto users especially in the U.S. were exposed to Bitcoin courtesy of Coinbase. However, the exchange has yet to embrace the Lightning Network to facilitate transaction settlement.
We’re looking into how to best add Lightning. It’s non-trivial, but I think worth doing. I’m all for payments taking off in Bitcoin.
Not sure why you think we’re ignoring Bitcoin – we’ve onboarded more people to Bitcoin than probably any company in the world.
Let’s build it… https://t.co/9dFGYd6XZt
— Brian Armstrong ?️ (@brian_armstrong) August 2, 2023
For context, the Bitcoin Network payments would likely be more popular if more exchanges embrace the Lightning Network. Most of them use other Networks such as Ethereum and Tron to facilitate transactions.
The Lightning Network achieves the same purpose but its adoption has been rather sluggish. However, we have recently seen an uptick in adoption across multiple exchanges recently, including Binance.
With #Binance‘s recent integration of the Lightning Network, you might be asking:
? How does it work?
? What problems does it solve?
? How will it benefit you?
Find the answers below ? https://t.co/3cnaaACX0Z
— Binance (@binance) July 29, 2023
Despite the growing rate of adoption, Bitcoin’s Lightning Network has not been growing as fast as expected. In fact, the number of channels has been on a downward trajectory for the last three months. This reflects the slowdown in market activity that prevailed across the market during the same period.
The Network’s fee rate has also been on a downward trajectory as is usually the case in low-volume market conditions.
Why has Bitcoin’s lightning Network been growing at a slow pace?
As highlighted earlier, the Bitcoin Lightning Network achieved a slower adoption rate so far compared to Ethereum layer 2 Networks. One of the potential reasons could be the fact that other rival Networks have been growing rapidly in terms of projects bringing in utility.
The potentially largest reason behind the Lightning Network’s appeal for WEB3 projects is likely the complex and difficult nature of building on it. As such, developers are more inclined to build on other Networks.
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Bitcoin might secure more utility from the Lightning Network if it manages to overcome the aforementioned challenge. Meanwhile, the fact that more exchanges are now embracing the Lightning Network could set Bitcoin up for a stronger future in the payments segment.