The Arrival of SegWit: Bitcoin’s Saving Grace?

SegWit (segregated witness) Bitcoin transactions are at an all-time high, and Bitcoin transaction fees are the lowest they have been in months. What factors contributed to this sudden change?

For new users of Bitcoin, SegWit may seem like a meaningless buzzword that does not hold any value. But, for those aware of what it is, it means so much more. SegWit is a relatively new improvement to the current Bitcoin network that hopes to solve or at least temporarily fix the cryptocurrency’s transaction fee and scaling problems.

The Arrival of SegWit: Bitcoin’s Saving Grace?

SegWit is a soft fork change which is not intrusive or destructive for the Bitcoin network. SegWit decreases the byte size of virtual currency transactions, which helps to decrease transaction fees by a substantial amount. All of this is achieved while still increasing the transaction capacity of the network. This is undoubtedly an important scaling solution for Bitcoin.

Dan Romero, Coinbase’s Vice President said:

SegWit is an important step in scaling the Bitcoin network. We are continuing to invest in our Bitcoin infrastructure and we will be working on implementing additional Bitcoin scalability improvements like transaction batching and improved UTXO management.

SegWit Adoption

Bitcoin fees were all the talk just one month ago. The whole crypto community and some media companies were talking about the exponential increase in the virtual currency’s fees that was seen over the course of 2017. This was evidently not the best coverage that the cryptocurrency could have received, and this media onslaught was not helpful in boosting the worldwide sentiment for Bitcoin.

But now, this is beginning to change and turn for the better. More and more Bitcoin service providers have begun running SegWit addresses. What does this mean for the end consumer?

This increase in SegWit-integrated addresses has allowed for a large decrease in the fees for transactions. This large decrease, often ranging in the high 30-40 percentiles off normal transaction prices, is giving users a bit more peace of mind when sending the cryptocurrency around.

Over 30% of all Bitcoin transactions today are being pushed using the SegWit protocol. To give this a bit of context, exactly one month ago, only 15% of all transactions utilized SegWit. This amount of adoption by consumers and Bitcoin service providers has been unprecedented, with the world’s largest cryptocurrency exchanges, such as GDAX/Coinbase and Bitfinex, implementing SegWit into their exchange transaction services.

In a direct result to this, Bitfinex has dropped Bitcoin withdrawal fees by 25% and GDAX/Coinbase’s transfer fees have been decreased drastically. Additionally, Binance and Kraken, two other large exchanges, followed suit with large fee decreases to follow this trend. This is just the start of SegWit adoption in the Bitcoin space. SegWit use is set to be adopted by many other exchanges and Bitcoin service providers in the near future.

It is evident to see that Bitcoin, with all its upcoming improvements, has a promising future. High cost and unsustainable fees are, hopefully, a thing of the past. With the arrival of promising new technologies and changes to the Bitcoin blockchain, you should never have to deal with $50 transaction fees ever again.

What do you think the use of Bitcoin as a daily driver coin? Will scaling problems for Bitcoin be solved in the future?

Images courtesy of Wikimedia Commons/@Davidstankiewicz, Pxhere, and Wikimedia Commons/@Albert dro.

07.03.2018 / 13:49 76
Cryptocurrency Exchanges Slash Withdrawal Fees Cryptocurrency Exchanges Slash
In the past week, three of the most popular cryptocurrency exchanges have cut bitcoin withdrawal fees by up to half. While the average price of
Bitcoin Transaction Volume Hits Two-Year Low, Despite Rock-Bottom Fees Bitcoin Transaction Volume Hits
Bitcoin traders are holding on to their funds, despite super-low network fees, data suggests. Bitcoin’s sideways price action has led to the lowest
What is Tinkering in Bitcoin Cores Toolbox? What is Tinkering in Bitcoin Cores
Segwit is an upgrade well on its way, but there are a few other things in the Bitcoin Core development Pipeline. Even though SegWit was released on
Bitcoin Transaction Volume Decreases With Batching, Not Due to Lack of Demand Bitcoin Transaction Volume Decreases
It is often difficult to find positive reports about Bitcoin. Too many transactions cause a spike in overall fees. Fewer transaction makes media
Bitcoin Fees Are Down Big: Why It Happened And What It Means Bitcoin Fees Are Down Big: Why It
$26 down to $3. The average cost of sending a bitcoin transaction is cheaper than it's been in a year and a half, showing the price isn't the
Bitcoin Core Releases Software Upgrade With Full SegWit Support Bitcoin Core Releases Software Upgrade
The Bitcoin Core development team has released a much-anticipated software upgrade designed to help scale the cryptocurrency network. Version 0.16.0
Comments (0)
Add a comment
Comment on