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Coinbase Commerce Discontinues Direct Bitcoin Payment Option for Merchants – What’s the Situation?
Coinbase has discontinued support for native Bitcoin (BTC) and other UTXO (Unspent Transaction Output) cryptocurrencies on its merchant payment platform, Coinbase Commerce.
In a recent update on X, Lauren Dowling, the head of product at the exchange, indicated that the decision to eliminate native Bitcoin and UTXO support stemmed from difficulties in implementing recent enhancements to Coinbase Commerce’s EVM (Ethereum Virtual Machine) payment protocol for Bitcoin.
Coinbase Commerce Introduces Support for New Assets
The updated Commerce product emphasizes enforcing payment details on-chain and accommodates a diverse array of assets, including both native and ERC-20 tokens.
Additionally, it automatically converts payments to USDC (USD Coin) on-chain at a fixed rate for merchants.
However, replicating these functionalities on the Bitcoin blockchain, which lacks smart contracts and stablecoins, presented considerable challenges, prompting the removal of native Bitcoin and UTXO support, according to Dowling.
“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.”
While Coinbase Commerce will no longer directly facilitate Bitcoin transactions for merchants, CEO Brian Armstrong clarified that customers with Coinbase accounts can still utilize Bitcoin as a payment method.
He also noted that Coinbase is in the process of integrating the Lightning Network, a layer-two scaling solution for Bitcoin, into its platform.
This integration may potentially create avenues for Lightning Network-based commerce payments in the future.
Crypto Payments to Transition to L2s: Armstrong
Armstrong further highlighted that the widespread adoption of crypto payments relies on transitioning away from layer-one solutions (the foundational blockchain) to lower transaction fees and confirmation times.
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“Hopefully there are opportunities to make commerce payments with Lightning in the future,” remarked Armstrong.
The Lightning Network is a payment protocol intended to streamline transactions within the Bitcoin blockchain. Bitcoin transactions have been utilizing 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, employed by Bitcoin and its forks such as Dogecoin, Litecoin, Dash, and Bitcoin Cash, is designed to ensure transparency and security.
In contrast, Ethereum adopts an account model that resembles traditional bank accounts, providing enhanced flexibility.
Coinbase’s choice to withdraw native Bitcoin support has drawn criticism from the community, with some users voicing concerns regarding its effect on Bitcoin adoption.
Critics contend that assuming every customer has a Coinbase account or resides in the United States, where Coinbase operates, may restrict broader acceptance.
They liken it to requiring customers to be Bank of America account holders for merchants who exclusively 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
This recent development follows shortly after Coinbase released its quarterly report, which revealed a 64% increase in transaction revenue, totaling $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.
