Coinbase Ends Support for Native Bitcoin and UTXO Coins on Coinbase Commerce
San Francisco-based cryptocurrency exchange Coinbase has announced that it will no longer support native Bitcoin and other Unspent Transaction Output (UTXO) coins on its merchant payment service, Coinbase Commerce. This decision is due to the absence of smart contracts and stablecoins on the Bitcoin blockchain, which presented significant obstacles. However, Coinbase CEO Brian Armstrong clarified that Bitcoin users can still utilize Coinbase Commerce if they have an account with the exchange.
The head of product at Coinbase, Lauren Dowling, stated that the decision was made after encountering challenges while attempting to integrate recent updates into its Ethereum Virtual Machine (EVM) payment protocol for Bitcoin. The updated Coinbase Commerce product aims to provide comprehensive payment details on the blockchain, support various assets including native and ERC-20 tokens, and automatically convert payments to USDC on the blockchain at a guaranteed rate for merchants.
Armstrong also expressed optimism about the ongoing integration of the Lightning Network into Coinbase. The Lightning Network is designed to facilitate faster and more cost-effective transactions on the Bitcoin blockchain, enabling commerce payments through this protocol in the future.
Furthermore, Armstrong emphasized the broader vision for cryptocurrency payments, highlighting the need to transition away from the base layer of blockchain (layer 1) in order to reduce transaction fees and confirmation times. This transition, he believes, is crucial for achieving mainstream adoption of crypto payments online.
The UTXO model, utilized by Bitcoin to track transactions, focuses on transparency and security. This model differs from Ethereum’s account-based system, which offers more flexibility and resembles traditional banking operations. Other cryptocurrencies that have forked from Bitcoin, such as Dogecoin, Litecoin, Dash, and Bitcoin Cash, also use the UTXO model.
Coinbase’s decision to discontinue support for native Bitcoin and UTXO coins on Coinbase Commerce has sparked debate within the cryptocurrency community. Some critics have expressed concerns about its potential impact on Bitcoin adoption, arguing that this move assumes all customers are based in the U.S. and willing or able to open a Coinbase account. They draw parallels to requiring all customers to bank with a specific bank in order to make payments.
Analyst comment
Neutral news: Coinbase Ends Support for Native Bitcoin and UTXO Coins on Coinbase Commerce
As an analyst, I anticipate that the market may initially experience some short-term volatility as this decision by Coinbase could lead to a decrease in Bitcoin adoption within the Coinbase Commerce platform. However, the company’s focus on integrating the Lightning Network and transitioning away from layer 1 blockchain could ultimately benefit crypto payments online and contribute to the mainstream adoption of cryptocurrencies.
