Coinbase has announced the discontinuation of support for native Bitcoin and other UTXO (Unspent Transaction Output) coins on its payment platform for merchants, Coinbase Commerce. This decision, conveyed by Lauren Dowling, the company’s head of product, stems from challenges in delivering recent updates on its EVM (Ethereum Virtual Machine) payment protocol for Bitcoin.
Dowling explained the decision in a thread on X (formerly Twitter), stating that the new version of Coinbase Commerce enforces payment details on-chain and supports a wide array of assets, including both native and ERC-20 tokens. Furthermore, payments are automatically converted to USDC stablecoin on-chain at a guaranteed rate for merchants. However, implementing similar capabilities on the Bitcoin blockchain without smart contracts and stablecoins proved to be challenging, leading to the removal of native Bitcoin and other UTXO coin support.
Although Coinbase Commerce users can still utilize Bitcoin for payments if they have a Coinbase account, Brian Armstrong, the CEO of Coinbase, mentioned that the company is actively integrating the Lightning Network into its platform. The Lightning Network, a payment protocol designed to expedite transactions on the Bitcoin blockchain, offers potential opportunities for future commerce payments.
Armstrong emphasized the necessity of transitioning away from layer 1 solutions, such as Bitcoin’s base layer, to reduce transaction fees and confirmation times, making cryptocurrency payments more practical for mainstream adoption.
The UTXO model, employed by Bitcoin and its forks like Dogecoin, Litecoin, Dash, and Bitcoin Cash, ensures transparency and security in transactions. Unlike Ethereum’s account model, which resembles traditional bank accounts, the UTXO model offers less flexibility but enhances security.
The decision to remove support for native Bitcoin payments has drawn criticism from the community, with some users expressing concerns about its impact on Bitcoin adoption. Critics argue that requiring customers to have a Coinbase account for Bitcoin payments may hinder adoption and limit accessibility, analogous to mandating Bank of America membership for merchants banking with the institution.
