Kraken will integrate the Lightning Network to support instant Bitcoin transfers and reduced withdrawal fees
Major US cryptocurrency exchange Kraken announced on Wednesday that it will integrate Bitcoin’s Lightning Network in 2021. Kraken pointed out that the integration will make possible significant improvements in speed and fees, saying that Lightning allows Bitcoin (BTC) „to process millions of transactions per second.“
In a comment to Cointelegraph, Kraken’s lead Bitcoin strategist Pierre Rochard revealed that Lightning will be integrated for withdrawals during the first half of 2021, reducing transfer fees from around $10 per transaction to almost one cent, just enough to prevent spam transactions, and enabling „instant“ withdrawals.
Rochard indicated that the deposit functionality will be integrated to follow. Although deposits are already free on Kraken, the integration will enable immediate settlement of these transfers, so traders will not have to wait the 30 minutes or so currently required for the three confirmations on Bitcoin’s blockchain. The strategist explained:
„We believe this will offer an advantage to traders who value speed in many of the strategies they adopt.“
To facilitate the integration, Rochard points out that Kraken has made a commitment to hire a new team dedicated specifically to the Lightning Network, inviting interested parties to apply for the positions.
The Lightning Network is Bitcoin’s layer-two protocol released in March 2018 following the activation in the previous year of the Segregated Witness update.
The protocol aims to reduce the number of transactions stored on the blockchain by using smart contract ‚payment channels‘ to facilitate transactions between individual users. Final balances can be transmitted to Bitcoin’s blockchain for settlement.
According to data from DeFi Pulse, the total value locked in the Lightning Network has reached a new all-time high of around $22 million.