- Binance users can now utilize the second-layer scaling solution for transactions
- Exchange had to suspend BTC withdrawals due to surge in network gas fees
Leading cryptocurrency exchange Binance has completed the integration of the Bitcoin Lightning Network for withdrawals and deposits in Bitcoin, potentially leading to lower fees, Cointelegraph reported, citing a blog post on the exchange’s website.
Binance users can now utilize the second-layer scaling solution for BTC transactions. When they want to deposit or withdraw Bitcoin, they can choose between Lightning, BNB Smart Chain (BEP-20), BTC (SegWit), Ethereum ERC-20, Bitcoin, and BNB Beacon Chain (BEP2).
What is the BTC Lightning Network?
The Bitcoin Lightning Network is designed to address some of the scalability issues faced by the Bitcoin blockchain. It aims to enable faster and cheaper transactions by creating off-chain payment channels between users.
These payment channels operate outside the main blockchain, allowing participants to conduct multiple transactions without broadcasting each one to the entire network. This mechanism reduces the burden on the main blockchain and enables more efficient micropayments and instant transactions.
How does it work?
Two parties open a payment channel by creating a multi-signature Bitcoin transaction on the main blockchain. This transaction allocates a certain amount of Bitcoin to the channel. Once the channel is open, the two parties can transact with each other by updating the channel's balance without involving the main blockchain.
Overcoming the gas fee surge
The exchange announced plans to integrate the Lightning Network in May this year after temporarily suspending BTC withdrawals. This intervention was necessary because there was an overwhelming number of pending transactions, which a surge in BTC network gas fees caused.
The spike in fees is largely owed to the issuing of BRC-20 meme coins on Bitcoin. This is a new token standard. On June 20, Binance confirmed its efforts to introduce the Lightning Network after users noticed the exchange’s Lightning nodes.
Binance is a relatively late adopter of the Lightning Network. It follows in the footsteps of Kraken, OKX, Bitfinex, CoinCorner, River Financial, and other prominent exchanges. Coinbase also has plans to integrate the Lightning Network, but the exchange hasn’t provided a timeline as to when that will happen.
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