The recent increase in Bitcoin (BTC) transaction fees has put pressure on one of the largest cryptocurrency exchanges to adopt the BTC Lightning Network. Following a second withdrawal halt, Binance announced that he would be working on “enabling BTC withdrawals via the Lightning Network, which will help in these situations.”
To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed.
Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.
—Binance (@binance) May 8, 2023
The Lightning Network (LN) is a federated system for cheap and near-instant payments built on top of the Bitcoin network. When the Bitcoin mempool (where transactions pending confirmation accumulate) is full or busy, the Lightning Network is not affected.
Several large cryptocurrency exchanges have joined the Lightning Network, including Bitfinex, River Financial, OKX, Kraken, and CoinCorner. If implemented correctly, the Lightning Network would allow users to immediately withdraw and send Bitcoin from their wallets, bypassing the congested Bitcoin blockchain.
Fees on Bitcoin are rising, and there are still many Bitcoin (to fiat) exchanges that haven’t adopted Lightning deposits and withdrawals
Technical challenges are not the reason. Solutions like @RiverRLS there is that make integration fast and easy for any business. The issue is… pic.twitter.com/WR5u7cjMCx
—Sam Wouters (@SDWouters) May 8, 2023
The largest cryptocurrency exchange in the United States, Coinbase, is also approaching the LN. Following comments that CEO Brian Armstrong would be joining the LN soon, Armstrong finally sent Cointelegraph reporter Joe Hall $100 on the Lightning Network, demonstrating that he is familiar with the layer 2 payments protocol.
European Bitcoin exchanges are also adopting the LN. Adem Bilican, CTO at Relai, a Swiss-based Bitcoin exchange, told Cointelegraph:
“We think Bitcoin is the best saving technology ever invented. But you have to be able to spend and send BTC as quickly and cheaply as possible. The Lightning Network is the best solution to deal with that, regardless of how the rates look. on-chain transaction”.
The Swiss Bitcoin exchange, Pocket Bitcoin, tweeted recently that he would “turn this Lightning thing on” in response to the ever-increasing fees on the Bitcoin base chain.
However, since LN is a relatively new solution in the cryptocurrency space, payment failures can occur. The network is growing and scaling organically, but more liquidity can help the network scale faster. Paolo Ardoino, CTO at Bitfinex, clarified the situation:
“The Bitfinex node is the most interconnected in the entire Lightning Network. It is also the largest, providing liquidity to most of the other nodes. Hence the chances of failure are extremely low.”
True to form, Ardoino tweeted in response to the high fees that users should ask their exchanges to join the Lightning Network. Binance and Coinbase have jumped on the bandwagon, while other big exchanges like Gemini, KuCoin, and Bybit have yet to announce Lightning Network implementations.
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