Leading crypto exchange Coinbase has recently announced the cessation of support for native Bitcoin and additional cryptocurrencies that utilize the Unspent Transaction Output (UTXO) model on its merchant service platform, Coinbase Commerce. This move was disclosed by Lauren Dowling, the Head of Product at Coinbase, highlighting the technological hurdles faced in adapting Bitcoin to the platform’s Ethereum Virtual Machine (EVM) payment protocol.
Bitcoin uses a UTXO (Unspent Transaction Output) model to manage transactions, prioritizing security and transparency. This model, which differs from Ethereum’s account-based system, is also employed by several other cryptocurrencies derived from Bitcoin, including Litecoin and Bitcoin Cash. Specifically, the absence of smart contracts and stablecoins on Bitcoin’s network was cited as a significant barrier by Dowling, necessitating the removal of Bitcoin and similar UTXO-based cryptocurrencies to maintain the platform’s efficiency and functionality.
Despite this change, Coinbase CEO Brian Armstrong assured users that Bitcoin payments could still be processed through the exchange’s accounts. He also highlighted ongoing efforts to incorporate the Lightning Network, a solution designed to enhance Bitcoin transaction efficiency, into Coinbase’s offerings. Armstrong shared his vision for the future of online crypto payments, emphasizing the need for advancements beyond the first blockchain layer to reduce transaction fees and times.
The community response to Coinbase’s decision has been mixed, with some users expressing concerns over the implications for Bitcoin’s adoption and the necessity of having a Coinbase account to utilize Bitcoin for commerce payments. A pseudonymous user critiqued the move, comparing it to requiring every customer to be a Bank of America customer for merchants banking with BofA to accept payments, highlighting concerns about customer preferences and accessibility.
The shift away from native Bitcoin support on Coinbase Commerce comes at a time when Coinbase Global Inc. reported a notable financial turnaround. For the first time in two years, the company recorded a profit driven by a resurgence in digital asset markets. The reported revenue of $953.8 million in the fourth quarter exceeded analysts’ expectations, with a significant increase in both consumer transaction revenue and institutional transaction revenue.
