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In line with its commitment made in May, cryptocurrency exchange leader Binance announced on Tuesday that it has commenced operating multiple nodes on Bitcoin’s lightning network.
The exchange intends to utilize the layer-2 scaling solution to facilitate lower-cost Bitcoin (BTC) deposits and withdrawals on its platform.
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- Binance decided to adopt lightning following a surge in memecoin and Ordinals activity on Bitcoin in May, which caused significant blockchain congestion and increased transaction fees by over 1000%.
- This situation hindered exchanges like Binance in fulfilling users’ deposit and withdrawal requests, leading the exchange to temporarily halt BTC withdrawals on May 7.
- In reaction, the company raised the transaction fee associated with Bitcoin withdrawals (to ensure quicker processing by miners) and informed users that lightning network withdrawals were forthcoming.
- “Some observant users noticed our new lightning nodes recently. Yes – that’s us,” tweeted Binance on Tuesday. “There’s still additional technical work to be completed. We’ll provide updates once Lightning is fully integrated.”
- Lightning nodes enable Bitcoin users to swiftly transfer funds among themselves using network channels, at nearly no cost. Users have the option to close their channels later and finalize their payments on Bitcoin’s primary blockchain, effectively consolidating numerous transactions into one.
- Tether CTO Paolo Ardoinio commended the initiative, while well-known Bitcoiner ODELL remarked that substantial lightning channels between major exchanges have a “clear product market fit.”
- Other exchanges such as Bitfinex and Kraken have already incorporated the lightning network for deposits and withdrawals.
- Software intelligence company MicroStrategy revealed in May that it would provide a Bitcoin wallet with a lightning address to its corporate account holders this year.
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