Binance customers are set to leverage the Bitcoin Lightning Network to execute deposit and withdrawal transactions. Customers of the leading crypto exchange by transaction volume can execute their transactions following the completion of the layer-2 scaling solution.
Binance Devotes to Resolve the Bitcoin’s Blockchain Challenge
The Monday, July 17 announcement by Binance revealed that integrating the scaling solution would expedite the transaction speed. It added that users could now choose the BTC-Lightning as the preferred network to complete Bitcoin deposits and withdraws from the platform.
The availability of the scaling solution that runs on the Bitcoin blockchain comes several weeks after the crypto exchange disclosed the ongoing project in June to incorporate Lightning nodes within the infrastructure.
The decision to integrate Lightning withdrawals became necessary in a May disclosure following the temporary suspension of Bitcoin withdrawals. Binance admitted that a layer-2 scaling solution was inevitable to avoid the congestion witnessed within the Bitcoin network prompting the suspension.
A subsequent communication conveyed via Binance tweet on Monday, July 17, announced the opening of withdrawals and deposit services on the Lightning Network. The integration would help Binance overcome the design challenges inherent in the Bitcoin blockchain.
Binance Integrating Lightning Network to Address Transaction Speed
Bitcoin design subjects transactions to slow speeds and higher costs. It arises from the unique nature of blockchain’s blocks, comprising transactions assembled. The design accommodates a defined number of transactions in each block. It implies that transactions unable to make it into the current block join the queue.
The queue often takes several minutes and potentially hours to process relative to the number of transactions pending in the mempool. Such experiences limit the Bitcoin blockchain’s utilization as a medium to execute quick transactions, mainly to make a regular purchases. No vendor would desire to utilize that keeps them waiting till the network verifies the client has the cash to afford the purchase.
Addressing the Transaction Cost Challenge
The Bitcoin community, developers, and researchers have devoted themselves to formulating solutions enabling the blockchain to accommodate various transactions. Binance considered the Lightning Network the second-layer solution that would skirt the primary Bitcoin blockchain, thereby speeding up the transactions at lower costs.
Bitcoin’s blockchain relies upon the consensus protocol identified as the proof-of-work. It requires the miners to expend energy in solving the difficult puzzle. The mining firms charge transaction fees to offset the energy and equipment costs.
The developers observed that a system dealing with small transactions often works well with the transaction costs involved lower. The transaction fees charged increase as the network grows. Such occurs since the newly mined blocks have limited space. The network prioritizes the transactions characterized by the highest fees for processing during moments of high usage.
Binance admits that the delays witnessed in May reignited the period before the 2021 bull run. The period saw the Bitcoin Mempool suffer over 420000 unconfirmed transactions.
The congestion suffered by the network triggered a sharp increase in the average transaction fees for every Bitcoin; the significant increase arose from the BRC-20 token standard formulated using the Bitcoin Ordinals protocol.
The move by Binance to integrate Lightning Network replicates the strategy adopted by other crypto exchanges, including Bitfinex, OKX, and Kraken. Also, the mobile-based platform Cash App confirmed the unveiling of the Lighting Network.
Binance to Accommodate Multiple Deposit Addresses
Meanwhile, the finalization of Lightning Network integration coincides with Binance introducing an additional feature allowing users to secure multiple deposit addresses in a single network.
The addition announced on July 17 decried that Binance users could only generate various deposit addresses to tokens issued on the Ethereum network. The limited scope accommodated restricted tokens, specifically those on Ethereum-compatible networks such as Arbitrum One and BNB Chain.
The new feature will allow Binance users to secure 20 deposit addresses in each network. It assured that it would periodically review the quota to ascertain whether to adjust the deposit addresses.
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