Coinbase has removed support for native Bitcoin (BTC) and other UTXO (Unspent Transaction Output) coins on its payment platform for merchants, Coinbase Commerce.
In a recent post on X, Lauren Dowling, the exchange’s head of product, said that the removal of native Bitcoin and UTXO support was driven by challenges in delivering recent updates on Coinbase Commerce’s EVM (Ethereum Virtual Machine) payment protocol for Bitcoin.
Coinbase Commerce Adds Support for New Assets
The new Commerce product focuses on enforcing payment details on-chain and supports a wide range of assets, including native and ERC-20 tokens.
It also automatically converts payments to USDC (USD Coin) on-chain at a guaranteed rate for merchants.
However, providing the same capabilities on the Bitcoin blockchain without smart contracts and stablecoins posed significant challenges, leading to the removal of native Bitcoin and UTXO support, Dowling said.
“Delivering these same capabilities on the Bitcoin blockchain without smart contracts and stablecoins was challenging & we therefore made the difficult decision to remove native Bitcoin & other UTXO support.”
Although Coinbase Commerce will no longer directly support Bitcoin transactions for merchants, CEO Brian Armstrong clarified that customers using Coinbase accounts can still use Bitcoin as a payment option.
He also mentioned that Coinbase is working on integrating the Lightning Network, a layer-two scaling solution for Bitcoin, into its platform.
This integration could potentially open up opportunities for Lightning Network-based commerce payments in the future.
Crypto Payments to Move to L2s: Armstrong
Armstrong further emphasized that the mainstream adoption of crypto payments is contingent on moving away from layer-one solutions (the base blockchain) to reduce transaction fees and confirmation times.
“Hopefully there are opportunities to make commerce payments with Lightning in the future,” commented Armstrong.
The Lightning Network is a payment protocol designed to facilitate transactions within the Bitcoin blockchain. Bitcoin transactions have been running on the protocol since 2017.
“Zooming out – we think paying for stuff online with crypto won’t really go mainstream until we get off Layer 1, and reduce transaction fees and confirmation times, so we’re trying to accelerate the move toward that world.”
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 UTXO model, used by Bitcoin and its forks like Dogecoin, Litecoin, Dash, and Bitcoin Cash, is designed for transparency and security.
In contrast, Ethereum utilizes an account model more akin to traditional bank accounts, offering greater flexibility.
Coinbase’s decision to remove native Bitcoin support has sparked criticism within the community, with some users expressing concerns about the impact on Bitcoin adoption.
Critics argue that assuming every customer has a Coinbase account or is based in the United States, where Coinbase operates, may limit broader acceptance.
They compare it to dictating that customers must be Bank of America account holders for merchants who solely bank with Bank of America to accept payments.
Coinbase is often acting as if they are fighting the good fight, but don’t be fooled, they aren’t.
Example, ‘Coinbase Commerce’ no longer supports payments from self-custody wallets or third party exchanges:
‘You can still accept Bitcoin, […] payments as long as your… pic.twitter.com/vgyTO7MLLq
— CR1337 (@cryptonator1337) February 18, 2024
The new development comes shortly after Coinbase announced its quarterly report, which showed a 64% jump in transaction revenue to take in $529.3 million in Q4, 2023.
The post Coinbase Commerce Removes Native Bitcoin Payment Support for Merchants – What’s Going On? appeared first on Cryptonews.
