The recent surge in Bitcoin (BTC) transaction fees has lit a fire under one of the largest crypto exchanges to upgrade to the Bitcoin Lightning Network. Following a second halt in withdrawals, Binance announced it would work on “enabling BTC Lightning Network withdrawals, which will help in such 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, near-instant payments built atop Bitcoin. When the Bitcoin mempool (where transactions waiting to be confirmed gather) is full or busy, the Lightning Network is unaffected.
Several large crypto exchanges have integrated the Lightning Network, including Bitfinex, River Financial, OKX, Kraken and CoinCorner. If implemented correctly, the Lightning Network would allow users to withdraw and send Bitcoin immediately from wallets, sidestepping 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
— Sam Wouters (@SDWouters) May 8, 2023
The largest crypto exchange in the United States, Coinbase, is also warming up to the LN. Further to comments that CEO Brian Armstrong would integrate the LN soon, Armstrong finally sent Cointelegraph reporter Joe Hall $100 over the Lightning Network, demonstrating that he is familiar with the layer-2 payments protocol.
European Bitcoin exchanges are also embracing the LN. Adem Bilican, the chief technology officer of Swiss-based Bitcoin exchange, Relai, told Cointelegraph:
“We believe that Bitcoin is the best savings technology ever invented. But you should be able to spend and send BTC as fast and cheaply as possible. The Lightning Network is the best solution to tackle that, no matter how the on-chain transaction fees look.”
Swiss Bitcoin exchange Pocket Bitcoin recently tweeted it would “get this Lightning thing started” in response to higher and higher fees on the Bitcoin base chain.
However, given that the LN is a relatively new solution in the crypto space, payment failure can occur. The network is growing and scaling organically, but more liquidity may help the network scale faster. Paolo Ardoino, chief technology officer of Bitfinex, shed light on the situation:
“The Bitfinex node is the most interconnected node on the entire Lightning Network. It is also the biggest, 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 crypto exchange to integrate LN. Binance and Coinbase are hopping on board, with other large exchanges Gemini, KuCoin and Bybit yet to announce implementing the LN.