Key Points
Coinbase Commerce Drops Support for Bitcoin and UTXO Coins
Coinbase Commerce, the merchant payment service of the crypto exchange Coinbase, has stopped supporting native Bitcoin and other Unspent Transaction Output (UTXO) coins. The announcement was made by Lauren Dowling, Coinbase’s head of product, on a thread on X dated February 18. The decision was driven by difficulties encountered while trying to incorporate recent updates into its Ethereum Virtual Machine (EVM) payment protocol for Bitcoin.
The updated Coinbase Commerce product is structured to record each payment on the blockchain. It supports a broad spectrum of assets, including native and ERC-20 tokens. Additionally, it can automatically convert payments to USDC on the blockchain at a fixed rate for merchants. However, the lack of smart contracts and stablecoins on the Bitcoin blockchain posed significant hurdles. This led to the decision to withdraw support for native Bitcoin and other UTXO-based coins.
Bitcoin Users Still Have Access to Coinbase Commerce
Despite the discontinuation of support for Bitcoin, Coinbase CEO Brian Armstrong reassured that Bitcoin users could still access Coinbase Commerce if they have an account with the exchange. Armstrong also touched on the ongoing integration of the Lightning Network into Coinbase. He expressed optimism about facilitating commerce payments through this protocol in the future. The Lightning Network is designed to expedite and reduce the cost of transactions on the Bitcoin blockchain.
Armstrong further expanded on the broader vision for cryptocurrency payments. He underscored the need to transition from the base layer of blockchain (layer 1) to lower transaction fees and confirmation times. He believes this shift is vital for the widespread acceptance of crypto payments online.
The UTXO model, used by Bitcoin to monitor transactions, prioritizes transparency and security. This model contrasts with Ethereum’s account-based system, which offers more flexibility and mirrors traditional banking operations. Other cryptocurrencies that have branched off from Bitcoin, such as Dogecoin, Litecoin, Dash, and Bitcoin Cash, also employ the UTXO model.
The decision by Coinbase has ignited a debate within the cryptocurrency community. Some are apprehensive about its effect on Bitcoin adoption. Critics argue that this move presumes all customers are based in the U.S. and are willing or able to open a Coinbase account. They draw comparisons to requiring all customers to bank with a specific bank to make payments.
