Binance, the world’s largest cryptocurrency exchange by trading volume, has successfully integrated the Lightning Network onto its platform, allowing for faster and more efficient Bitcoin (BTC) transactions. The announcement was made by the exchange in a July 17 blog post where it noted that customers can now start using the scaling network to deposit and withdraw Bitcoin.
The Bitcoin Lightning Network is a layer-2 scaling solution built upon the Bitcoin blockchain that supports faster, cheaper, and more scalable transactions by enabling users to create off-chain transaction channels.
The crypto exchange previously hinted at integrating Lightning Network in May after it had to temporarily pause BTC withdrawals due to a surge in the gas fees on the Bitcoin network, which caused a flood of pending transactions.
Binance attributed the gas fee explosion to the rise in brc-20 assets in the market. BRC-20 is a new token standard on the Bitcoin network that is being used to create meme coins and NFTs. Last month, some eagle-eyed users spotted Binance’s own Lightning nodes, which led to the company confirming that it was onboarding the scaling solution to its trading platform.
The Integration of the Lightning Network
Binance users can now take advantage of the layer-2 protocol’s off-chain payment channels to send and receive Bitcoin transactions with minimal fees and faster settlement times. The direct payment channels carry out transactions without congesting the main blockchain. Hence avoiding a situation where gas fees surge and transactions get delayed.
Lightning Network users can also set up direct payment channels among themselves to send and receive BTC.
According to the blog post, Binance account holders can now find their pre-assigned Bitcoin deposit address on the Lightning Network within the “Deposit Crypto” page on the exchange. Customers can select “LIGHTNING” as an option when depositing or withdrawing BTC.
Other than the Lightning Network, customers can use BNB Smart Chain (BEP-20), Bitcoin (BTC), BNB Beacon Chain (BEP2), BTC (SegWit), and Ethereum (ERC-20) blockchains to conduct Bitcoin transactions. Binance has also provided a FAQ on its website that guides users on how to use the Lightning Network.
Binance joins several high-profile crypto exchanges, including BitFinex, River Financial, OKX, Kraken, and CoinCorner, to have added support for the Bitcoin scaling solution. The Lightning Network is gaining traction so fast that in April, Coinbase CEO Brian Armstrong indicated his intention to integrate the payment rail on the Coinbase exchange.
Last month, The Block reported Lightning Network reached a new all-time high Bitcoin capacity. On June 26, 5,630 BTC ($1.686 billion) was reported to be locked in payment channels on the network, breaking its previous record of 5,620 BTC ($1.683 billion), which was achieved in April. As adoption rates continue to rise, the capacity of the scaling network is up 42% in Bitcoin and 105% in U.S. dollars over the last 12 months, according to data compiled by The Block’s crypto dashboard.
The network’s growth coincides with increased adoption by crypto exchanges and the steady rise in Bitcoin price. The popularity of Ordinals – a BRC-20 NFT collection minted on the Bitcoin blockchain – also drove adoption as customers flocked in to get their hands on the asset, causing the mainnet to choke, leading to the gas fee explosion scenario suffered by Binance three months prior.
Just last week, Coinfinity, an Austria-based crypto exchange, integrated the Lightning Network. The company aims to enhance Bitcoin’s usability as a payment system that could rival the transaction volumes of the world’s top two payment networks, Visa and Mastercard.
At the time of writing, BTC is trading at $29,972, down 0.5% in the last 24 hours. According to CoinGecko, Bitcoin prices have surged 83% since the start of the year but is still down over 50% from the all-time high of $69,000 it hit in November 2021.