Coinbase has integrated the Lightning Network for Bitcoin transactions, allowing users to choose between Lightning and the Bitcoin network for transferring Bitcoin. Customers of Coinbase can now transfer Bitcoin more quickly and cost-effectively through the layer-2 Lightning Network compared to traditional Bitcoin blockchain transactions. To utilize the Lightning Network, recipients need to provide an invoice containing a lengthy string of characters representing the transfer amount.

Transfers made on the Lightning Network are considered "instant," as opposed to Bitcoin network transactions, which may take anywhere from 10 minutes to 2 hours due to limited transaction processing capacity. However, Coinbase cautioned that sending via Lightning to certain self-custody wallets might experience delays of multiple hours or failures due to differing implementations or fee structures. Senders using Coinbase will incur a 0.1% processing fee on the transfer amount.

Coinbase partnered with Lightspark as its Lightning payment solution provider, headed by former PayPal president David Marcus. Lightspark emphasized the use of remote-key signing implementation by Coinbase, where Lightning signing keys are held entirely by Coinbase while Lightspark hosts their Lightning node.

According to Coinbase protocol specialist Viktor Bunin, the decision to incorporate Lightning into the exchange was driven by the network's growth and adoption, technological maturity, and the objective of reducing onchain payments to 1 second and costing 1 cent, a goal evaluated over several years. Bunin described the integration as a significant milestone for the ecosystem.

Coinbase, one of the largest BTC exchanges globally, follows the footsteps of competitors like Binance, Kraken, and Bitfinex, who have already introduced Lightning Network support in their services.