Coinbase Commerce eliminates Bitcoin and UTXO coins from its merchant platform
Coinbase, a popular cryptocurrency exchange, has made the decision to discontinue support for native Bitcoin and other Unspent Transaction Output (UTXO) coins on its merchant payment service, Coinbase Commerce. The move was announced by Lauren Dowling, the head of product at Coinbase, who explained that the decision was driven by challenges faced while trying to integrate recent updates into its Ethereum Virtual Machine (EVM) payment protocol for Bitcoin.
The updated Coinbase Commerce product aims to provide a detailed view of each payment on the blockchain and support a wide range of assets, including native and ERC-20 tokens. It also automatically converts payments to USDC, a stablecoin, on the blockchain at a guaranteed rate for merchants. However, the absence of smart contracts and stablecoins on the Bitcoin blockchain posed significant obstacles, leading to the removal of support for native Bitcoin and other UTXO-based coins.
Coinbase CEO Brian Armstrong clarified that Bitcoin users can still utilize Coinbase Commerce if they have an account with the exchange. He also expressed optimism about the integration of the Lightning Network into Coinbase, which aims to enable faster and more cost-effective transactions on the Bitcoin blockchain, potentially facilitating commerce payments in the future.
Armstrong further emphasized the broader vision for cryptocurrency payments, highlighting the importance of transitioning away from the base layer of blockchain to reduce transaction fees and confirmation times. This shift, he believes, is crucial for the widespread adoption of crypto payments online.
The UTXO model, which Bitcoin utilizes to track transactions, prioritizes transparency and security. This differs from Ethereum’s account-based system, which offers more flexibility and resembles traditional banking operations. Other cryptocurrencies like Dogecoin, Litecoin, Dash, and Bitcoin Cash, which have forked from Bitcoin, also use the UTXO model.
Coinbase’s decision has sparked debate within the cryptocurrency community, with some expressing concerns about its potential impact on Bitcoin adoption. Critics argue that this move assumes all customers are located in the U.S. and willing or able to open a Coinbase account, drawing comparisons to requiring all customers to bank with a specific institution to make payments.
