Coinbase Commerce, the payment portal of the popular cryptocurrency exchange Coinbase, has announced that it will no longer support native Bitcoin payments across its platform. The decision has sparked controversy and criticism from the crypto community, who see it as a betrayal of Bitcoin’s founding principles.

Why Coinbase Commerce Removed Native Bitcoin Payments

According to Lauren Dowling, the head of product at Coinbase Commerce, the reason for dropping native Bitcoin payments was to improve the user experience and offer more features and capabilities to merchants and customers. Dowling explained on her X account on February 18 that “customers were struggling with operational challenges managing crypto volatility risk, manual burden of resolving incorrect payments (eg: underpaid) and limited asset support.”

Dowling also said that delivering the same capabilities on the Bitcoin blockchain without smart contracts and stablecoins was challenging, and that Coinbase Commerce would focus on supporting payments on the Ethereum Virtual Machine (EVM) protocol, which allows for more flexibility and functionality.

How Coinbase Commerce Users Can Still Pay With Bitcoin

Despite the removal of native Bitcoin payments, Coinbase Commerce users can still pay with Bitcoin and other UTXO coins from their Coinbase account, which accounts for a significant portion of the Bitcoin volume the platform handles. Dowling said that Coinbase to Coinbase transactions happen off-chain, so they can be instant and free.

Coinbase Commerce Faces Backlash

Coinbase CEO Brian Armstrong also commented on the change, saying that he believes paying with crypto will primarily happen on Layer 2 in the future, and that Coinbase wants to help make that happen. Armstrong also mentioned plans to integrate the Lightning Network into Coinbase, which could enable faster and cheaper Bitcoin payments.

How the Crypto Community Reacted to the Change

The announcement by Coinbase Commerce was met with mixed reactions from the crypto community. Some users expressed disappointment and frustration, saying that Coinbase was moving away from Bitcoin’s vision of peer-to-peer finance, privacy, and freedom. Some also questioned the usability and accessibility of the new payment system, which requires customers to have a Coinbase account or a self-custody wallet compatible with the EVM protocol.

Others defended Coinbase’s decision, saying that it was a pragmatic and sensible move to improve the customer experience and offer more options and features. Some also pointed out that Coinbase Commerce is not the only crypto payment service provider, and that there are alternative ways to pay with Bitcoin, such as using the Lightning Network or other platforms that support native Bitcoin payments.

What This Means for the Future of Bitcoin Payments

The decision by Coinbase Commerce to drop native Bitcoin payments is a significant one, as it reflects the challenges and trade-offs involved in using Bitcoin as a medium of exchange. Bitcoin transactions rely on the UTXO model, which is designed for transparency and security, but also comes with limitations such as scalability, speed, and cost.

While some see these limitations as inherent and acceptable features of Bitcoin, others seek to overcome them by using Layer 2 solutions, such as the Lightning Network, or other protocols, such as the EVM, that allow for more functionality and flexibility. The future of Bitcoin payments may depend on the adoption and innovation of these solutions, as well as the preferences and demands of the users and merchants

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