Binance today announced it has plans to integrate Bitcoin Lightning Network as part of measures to prevent congestion on the exchange. The exchange said this after Bitcoin transactions caused congestion on the platform, leading to suspension of withdrawal twice in one day.
In the early hours of today, Binance exchange experienced a spike in the volume of Bitcoin withdrawal requests. This could have been as a result of panic from Bitcoin investors concerning the recent news of an impending downward move for the asset, we don’t know.
However, Binance had to adjust the transaction fees for the pending Bitcoin withdrawal requests for them to go through. This is because miners prioritize transactions with higher fees, and Binance’s initial set fees weren’t enough to make the transactions a priority.
“We’re replacing the pending $BTC withdrawal transactions with a higher fee so that they get picked up by mining pools. We aim to reopen $BTC withdrawals in the next hour,” Binance stated in a series of tweets via its Twitter.
“Pending transactions are being processed by replacing them with higher transaction fees. We’ll post another update once these pending transactions are all processed,” a follow up tweet stated.
Binance to Integrate Lightning Network
Binance acknowledged that the development was a learning opportunity for the team, and it will ensure another congestion doesn’t rhappen again in the future. To this end, the exchange is looking to integrate Bitcoin Lightning Network on the platform.
Lightning Network is a Bitcoin Layer 2 scaling solution that enables faster and cheaper Bitcoin transactions. Bitcoin by its design doesn’t accommodate many transactions at a time, which makes the network likely to get congested with pending transactions, resulting in higher fees.
With Lightning Network, high volume transactions such as the one resulting in the congestion can be easily handled since the network increases the processing capacity of Bitcoin. The transaction fees also will naturally drop, which is what every Bitcoin user desires.
Interestingly, the technology has higher potentials than just as a scaling solution for Bitcoin. Recent information shows that developers are considering using it for altcoin transactions also. Admittedly, most altcoin transactions are faster than Bitcoin’s, but the security that Bitcoin enjots can be transafered to alcoins by using Lightning Network.
The potential even spreads to decentralized exchanges to increase the security of such platforms which are currently used to steal from unsuspecting investors.
Is Binance in More Trouble?
Regulators in the U.S have had issues with Binance recently. First, the commodity futures trading commission (CFTC) has gone to court demanding suspension of its operations for federal law violations. Secondly, the U.S department of justice (DOJ) is investigating the exchange for possible violation of U.S sanctions on Russia by letting Russians use its services.
While the exchange is still on this, the Bitcoin congestion issue came up today, resulting in panic among its users. Hopefully this will not lead to more trouble for the exchange which is already fighting hard to clear its name, and Lightning Network could go a long way to help.
After Binance adopts the technology, it is likely that more crypto exchanges will emulate the top exchange to make Bitcoin transactions easier on their platforms. Bitcoin transactions become an issue especially during times of high activity such as during a bullrun or panic such as this.