Deposits and withdrawals for Bitcoin (BTC) on Binance are now taking place on the Lightning Network. What’s the difference?
A leading international crypto exchange Binance has completed its planned integration of the Bitcoin Lightning Network. The move enabled both deposits and withdrawals on the layer-2 scaling solution for Bitcoin.
The exchange, which has recently been sued by the US SEC with a range of wild accusations starting from lack of disclosure to “manipulative trading” practices, has been working to onboard the Lightning Network since June. Binance decided to incorporate the new Bitcoin network shortly after the surge in BTC network gas fees led to an increasing pending transaction number in May.
Today, Binance users have the following network options when choosing to deposit or withdraw their BTC: BNB Smart Chain, BNB Beacon Chain, BTC (SegWit), Bitcoin Lightning Network, Bitcoin mainnet and Ethereum ERC-20.
The Bitcoin Lightning Network is a layer-2 scaling solution built on top of the original Bitcoin blockchain. Its main purpose is to enable faster, cheaper, and more scalable transactions. The network achieves those goals by allowing users to create new off-chain transaction channels.
As most transactions are processed off-chain, the Lightning Network (LN) alleviates the burden for the mainnet and allows for a higher number of transactions per second. Besides, LN transactions don’t require confirmation by miners which means payments can be settled within milliseconds.
Finally, transactions taking place on LN have significantly lower fees than those occurring on the traditional Bitcoin network.
That is why not only Binance but many other prominent crypto exchanges such as Bitfinex, River Financial, OKX, Kraken and CoinCorner have embraced the opportunities brought to users by the Lightning Network. Reportedly, Coinbase is also considering the possibility.