On April 1, US-based Kraken became the last major crypto-exchange to integrate with Lightning, announcing that it now “supports instant Lightning Network transactions.” As noted in the ad, the tier two solution can process millions of transactions per second, largely because it handles large groups of transactions outside of the Bitcoin blockchain, before sending accounts aimed at the latter for verification.
Kraken joins a growing list of exchanges that now allow their users to save money on Bitcoin fees with Lightning.
This list is likely to change in the future, but for now, here’s a current rundown of all the major platforms that support the network:
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Aax
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Bitfinex
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BitMex
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Bitstamp
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BullBitcoin
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CoinCorner
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kraken
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NiceHash Property
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OKX (formerly OKEx)
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OKCoin
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Paxful
A list that includes smaller exchanges has now been added to GitHub by tester David Coen. As with the list above, it also shows that none of Coinbase, Binance, or FTX — three of the largest exchanges in the industry — have integrated with the Lightning Network. And it’s possible they won’t add support in the near future, with some observers speculating that Lightning may go against their business interests (e.g. it makes it cheaper to take BTC off their platforms).
Therefore, anyone who wants to use Lightning Network to save money on their Bitcoin fees will have to use one of the exchanges listed above. For people who transfer small amounts of BTC more regularly, using Lightning is becoming increasingly important, so they might also consider switching exchanges.
As an example of what you need to do to actually use the Lightning Network, here’s a rundown of how you use it on Kraken.
First, let’s say you want to withdraw BTC using the network. You will need a third-party wallet to send this BTC, and most importantly, it must be compatible with Lightning Network.
Assuming you’ve set up with one of these wallets, you can then proceed with the actual use of the Lightning Network to withdraw funds from Kraken to it. Here’s what you do:
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Go to kraken.com, click Sign in, and sign in to your account.
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Click Funding at the top of the home screen.
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Under Account Balances, find your bitcoin and click the Withdraw icon (it’s an arrow pointing upwards).
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On the left side of the screen, you now have two options to withdraw BTC: Bitcoin Network and Lightning Network. Click Lightning Network.
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At this point, you will need to add a withdrawal request to your Lightning-compatible BTC wallet. You can do this by opening your wallet, choosing Receive (or something similar, depending on your wallet). Then, enter the specific amount you wish to receive and enter a description (e.g. “BTC withdrawal from Kraken”). Then copy the withdrawal request (it’s a long alphanumeric code, much like a Bitcoin address).
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Click Add withdrawal request at the bottom of the Funding on Kraken screen. Then copy the withdrawal request you created in your wallet in the Withdrawal Request field. Also enter a request label (e.g. “BTC withdrawal to Muun”).
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Once you’ve entered the two fields, click Add withdrawal request. This will involve sending a confirmation email to the email address registered with your Kraken account.
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Enter your email account and use the email sent by Kraken to confirm your withdrawal request. Then, going back to Kraken, click Withdraw to complete the withdrawal.
At first glance, this might seem a bit complicated. But all that comes down to generating a withdrawal request on your Lightning-backed wallet and copying this request into Kraken, or whatever exchange you may use.
The same basic process also works for deposits, although things do in reverse, with generating a deposit request on Kraken that is then pasted into your wallet.
Payment apps and service providers that support Lightning Network
In addition to exchanges, several cryptocurrency-based payment providers and services have begun to integrate with the Lightning Network. This includes BitPay, the cryptocurrency payments processor that integrated with the network on April 6, expanding its reach beyond the 80 million people cited in Arcane Research’s report that covers until the end of March.
BitPay’s support for the network means that anyone with a compatible BTC wallet can use that wallet to pay a merchant using Lightning and BitPay. And in addition to BitPay, Cash App and Strike are two other major applications that support Lightning-based payments.
Although the number of such apps remains small compared to exchanges that support Lightning Network, they still provide a reliable means of using Lightning to save on fees. In other words, they are proving that bitcoin can become a viable means of payment, even though its reputation still revolves mainly around its status as a “store of value” and “digital gold.”
And with Arcane’s research showing that the value of Lightning-based payments increased by 400% between Q1 2021 and Q1 2022, it’s probably only a matter of time before more apps support the network and before bitcoin becomes even more widely used as an alternative currency.
