Coinbase has discontinued direct Bitcoin and other UTXO-based cryptocurrency payments through its merchant service, Coinbase Commerce.
The decision to phase out support for native Bitcoin payments was revealed by Lauren Dowling, the company's head of product, in a thread on X on February 18.
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The UTXO (Unspent Transaction Output) model, foundational to Bitcoin and several other cryptocurrencies, such as Litecoin, is designed for enhanced transparency and security. However, it has faced criticism for its limitations compared to more flexible account models like Ethereum's.
Dowling explained that the complexities associated with implementing recent updates for its EVM payment protocol on Bitcoin led to this strategic pivot.
The new Commerce product enforces the details of each payment onchain, supports hundreds of assets <...>, & automatically converts payments to USDC onchain at a guaranteed rate to merchants. 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.
Despite this change, Coinbase CEO Brian Armstrong emphasized that Bitcoin users could still make purchases, provided they have a Coinbase account account.
Armstrong also hinted at the potential integration of the Lightning Network, a Layer-2 payment protocol aimed at reducing transaction fees and speeding up confirmation times for Bitcoin transactions, as a future enhancement for commerce payments.
The update reflects Coinbase's broader strategy to streamline online cryptocurrency transactions by moving away from the Layer-1 blockchain.
The announcement has not been without its critics. Some cryptocurrency community members have expressed discontent with needing a Coinbase account to accept payments.
While the update aims to facilitate a smoother transaction experience, it raises important questions about the future of Bitcoin adoption and the balance between innovation and accessibility in the digital currency environment.
In other related news, Coinbase collaborated with Ledger to simplify cryptocurrency transactions.
