Crypto exchange Coinbase has ceased support for native Bitcoin and other Unspent Transaction Output (UTXO) coins on its merchant payment service, Coinbase Commerce.
Lauren Dowling, Coinbase’s head of product, disclosed the decision on Feb. 18, citing difficulties encountered while attempting to integrate recent updates into its Ethereum Virtual Machine (EVM) payment protocol for Bitcoin. The updated Coinbase Commerce product aims to meticulously record each payment on the blockchain, accommodating a wide array of assets, including native and ERC-20 tokens, and automatically converting payments to USDC on the blockchain at a guaranteed rate for merchants. The absence of smart contracts and stablecoins on the Bitcoin blockchain posed significant challenges, prompting the discontinuation of support for native Bitcoin and other UTXO-based coins.
1/ Hey folks, I’m the product lead for Coinbase Commerce and want to share some thoughts on how the product is evolving, why we’ve made these changes, and clarify what it means for our asset support strategy moving forward. 👇
— Lauren Dowling (@Lauren_Dowling_) February 17, 2024
Despite this decision, Coinbase CEO Brian Armstrong assured that Bitcoin users could continue utilizing Coinbase Commerce if they possess an account with the exchange. Armstrong also highlighted the ongoing integration of the Lightning Network into Coinbase, expressing optimism about enabling commerce payments through this protocol in the future.
This isn't quite right, so let me share some more context in case helpful:
– Commerce uses a new EVM payment protocol.
– You can pay from any self-custody wallet
– We believe paying with crypto is going to primarily happen on Layer 2 in the future and we want to help make that…— Brian Armstrong 🛡️ (@brian_armstrong) February 17, 2024
The Lightning Network aims to expedite and reduce the cost of transactions on the Bitcoin blockchain. Armstrong further elaborated on the broader vision for cryptocurrency payments, emphasizing the necessity of transitioning away from the base layer of blockchain (layer 1) to alleviate transaction fees and confirmation times, crucial for mainstream adoption of crypto payments online.
The UTXO model, employed by Bitcoin to track transactions, prioritizes transparency and security. This model stands in contrast to Ethereum’s account-based system, offering more flexibility and resembling traditional banking operations. Other cryptocurrencies that have forked from Bitcoin, such as Dogecoin, Litecoin, Dash, and Bitcoin Cash, also adopt the UTXO model.
Coinbase’s decision has ignited debate within the cryptocurrency community, with some expressing concerns regarding its potential impact on Bitcoin adoption. Critics argue that this move assumes all customers are based in the U.S. and willing or able to open a Coinbase account, drawing parallels to mandating all customers to bank with a specific bank to facilitate payments.
Last edited by CS Web Desk on February 19, 2024 5:09 pm
