After over two years of development, Bitcoin's Lightning Network has begun to see integration into some of the market's top platforms. This week, Kraken, one of the oldest exchanges in the market, threw its hat into the LN-ring. Specifically, this hugely popular exchange plans to add support for the Lightning Network in 2021,
Kraken is currently seeking out LN-developers to make the concept a reality. According to the post, the network feels its “critical to refine and scale Bitcoin’s UX across our products.” The document explains that to stay competitive, Kraken intends to remain on the cutting edge of Bitcoin scaling technologies such as the Lightning Network.
The Community Demands Lightning Network Integration
Discussing the decision in a recent interview, long time crypto star, Pierre Rochard, spoke on the community's demands. He described what he sees as a demand by investors for instant and efficient Bitcoin payment processes. Features such as the ability to deposit and withdraw Bitcoin without waiting for confirmations are at the top of traders' demands. There is also a strong push to reduce fees associated with these transactions.
The decision to add support for the Lightning Network comes on the heels of two major upgrades to the network – MPPs and Wumbo channels. Both updates provide users with more flexibility in terms of the amounts they can send. Specifically, Wumbo channels allow users to send higher amounts of Bitcoin. Notably, these channels received their name because, much like the Wumbo Sponge Bob episode that created the word, you need to opt into Wumbo channels.
MPPs (multi-path payments) accomplish the same task, allowing users to send larger funds via the Lighting Network, albeit in a completely different manner. MPPs allows users to send large transactions split up over various channels and in smaller amounts.
The very concept of Lightning Network payments on Kraken is exciting. As one of the oldest exchanges in operation today, Kraken has a massive and well-established user base. These users will now be able to take advantage of more arbitrage trading activities using the Lightning Network.
According to company executives, the network will begin the integration with withdrawals. Users can withdraw their Bitcoin via the Lightning Network and save a bundle on fees compared to traditional Bitcoin. The next step is to add support for Lightning Network deposits.
Currently, centralized exchange users pay arguably high fees when loading or removing funds from these platforms. Consequently, Kraken believes that users will be drawn to the opportunity to secure higher ROIs and a more responsive trading strategy.
It’s All About the Satoshis
When discussing what took so long for this integration to occur, Kraken CEO, Jesse Powel doesn’t mince words. In multiple social media posts, he calmly explains that the decision is made based on profitability. In the past, some have criticized the exchange's decision to list multiple DeFi ERC-20 tokens rather than focus on Lightning Network integration.
Kraken entered the market in 2011. The platform has remained a top exchange since its inception. Today, Kraken boasts over four million clients. Respectively, Kraken is one of the world's largest and most successful Bitcoin exchanges ever.
More Exchanges Join the Lightning Network Revolution
Kraken is the latest in a string of Lightning Network integrations. This unique off-chain protocol continues to gain momentum in the market. It will be interesting to see how Kraken's latest addition adds to this drive. Kraken users can now prepare to see lower rates and faster transactions than ever, thanks to the Lightning Network.