Coinbase Commerce, the payment platform for merchants, has made waves by removing support for native Bitcoin (BTC) and other UTXO (Unspent Transaction Output) coins. The decision, as explained by Lauren Dowling on X, Coinbase’s head of product, stemmed from challenges in implementing recent updates on Coinbase Commerce’s EVM (Ethereum Virtual Machine) payment protocol for Bitcoin.
In response to this change, Coinbase Commerce has introduced a new product focusing on enforcing payment details on-chain and supporting a diverse array of assets, including native and ERC-20 tokens. This revamped system automatically converts payments to USDC (USD Coin) on-chain at a guaranteed rate for merchants.
However, delivering similar functionalities on the Bitcoin blockchain, lacking smart contracts and stablecoins, posed significant hurdles, prompting the removal of native Bitcoin and UTXO support, according to Dowling.
While Coinbase Commerce will no longer directly support Bitcoin transactions for merchants, CEO Brian Armstrong clarified that customers using Coinbase accounts can still utilize Bitcoin as a payment option.
Additionally, Coinbase is actively working on integrating the Lightning Network, a layer-two scaling solution for Bitcoin, into its platform, potentially opening avenues for Lightning Network-based commerce payments in the future.
Armstrong stressed the importance of moving crypto payments away from layer-one solutions to reduce transaction fees and confirmation times, asserting that mainstream adoption hinges on this shift.
Critics within the community have voiced concerns about Coinbase’s decision, citing potential limitations on Bitcoin adoption. Some argue that assuming every customer has a Coinbase account or is based in the United States, where Coinbase operates, may restrict broader acceptance, likening it to requiring customers to hold Bank of America accounts for merchants solely banking with Bank of America to accept payments.
Coinbase’s move comes on the heels of its quarterly report, revealing a 64% surge in transaction revenue to $529.3 million in Q4 2023.