Leading cryptocurrency exchange Coinbase Global Inc. (NASDAQ: COIN) has made a decision to discontinue its support for Unspent Transaction Output (UTXO) and native Bitcoin from its merchant platform, Coinbase Commerce. For years, Coinbase Commerce has been a go-to choice for merchants interested in accepting payments in various cryptocurrencies, including Bitcoin. The platform has provided merchants with user-friendly tools such as hosted checkout, eCommerce options, payment buttons and invoicing via its API.
Coinbase head of product Lauren Dowling announced the decision on X on Feb. 18, 2024, noting that the move was prompted by difficulties faced while trying to integrate new updates into the Ethereum Virtual Machine (EVM) payment system for Bitcoin.
The revamped Coinbase Commerce aims to offer enhanced blockchain transparency for each payment, supporting a broader range of assets, including ERC-20 and native tokens. Furthermore, payments will be instantly converted to USDC at a rate that is guaranteed for merchants. The lack of stablecoins and smart contracts on the Bitcoin blockchain presented serious difficulties, which resulted in the withdrawal of support for Bitcoin and UTXO coins.
However, Coinbase CEO Brian Armstrong reassured Bitcoin users that they could still utilize the platform provided they had an account with Coinbase. He also expressed optimism about Coinbase’s current integration of the Lightning Network (LN), which seeks to expedite and reduce the costs of transactions on the blockchain, potentially enhancing commerce payments in the future.
Additionally, Armstrong outlined an expansive vision for crypto payments, highlighting the necessity to move away from the blockchain’s base layer to alleviate confirmation times and transaction costs, a critical first step for the widespread acceptance of cryptocurrency payments over the internet. Bitcoin’s UTXO model places greater emphasis on security and transparency than ether’s account-based structure, which provides more flexibility similar to typical banking operations. The UTXO mechanism is also used by other Bitcoin-derived cryptocurrencies, including BitcoinCash, Dash, Litecoin and Dogecoin.
The decision made by Coinbase has sparked discussion among both crypto enthusiasts and critics. Some worry about how it will affect the uptake of Bitcoin, pointing out that it assumes that all users are able or willing to register a Coinbase account and are based in the United States. They compare it to requiring users to bank with a certain financial institution to make payments.
The recent announcement comes soon after Coinbase released its quarterly report, which showed that transaction revenue had increased significantly by 64% to $529.3 million in the last quarter of 2023.
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