Coinbase is currently the biggest worldwide wallet platform and brokerage for cryptocurrencies with a platform valued at upwards of $1.6 billion. But, the firm has been under fire on a variety of different fronts as of late.
Clearing the Mining Pool
The latest reason for them coming under attack is due to the lack of Segregated Witness (SegWit) and batching of transactions when it comes to their platform.
Coinbase is one of the main reasons why there is so much congestion on the bitcoin network as they are not efficiently utilizing the block space. A lot of people are moving away from platforms like Coinbase as they no longer want to be a part of this problem.
It was Jameson Lopp, who is the leading architect and engineer for BitGo, a security service provider for multi-signature blockchain who has proposed a simple idea for Coinbase to implement.
He says that this congestion problem can be eased by merely implementing a fee choice depending on the priority of the transaction. This means that transactions would be able to be batched together every few minutes, utilizing space more efficiently.
This would lead to a reduction in transaction fees for a lot of users, as well as an easing of the congestion on the network. The likes of Kraken, Bitstamp, and LocalBitcoins are already batching and utilizing SegWit.
Charting The Mempool
Blockchain is the second most used wallet platform, and they have released some interesting data related to bitcoin and the market as a whole.
They have said that the bitcoin mempool is still over 121 million bytes, with each block having an average of 1.05MB. However, the volume of transactions on a daily basis of bitcoin is significantly down to 225,800 transactions from 450,000 transactions. This means that there are still similar levels of congestion as were seen when the daily volume of transactions was double what it is in January 2018.
The mempool is effectively an area for holding all transactions that have yet to be confirmed. Miners pick up their transactions from this mempool to verify and confirm the payments before they are sent to the central bitcoin blockchain.
If there is network congestion in the mempool, then it takes longer for these transactions to be processed by the miners, which means that bitcoin as a medium of exchange is less usable and efficient. A lot of people point their fingers towards the likes of Coinbase for being the causes of these issues as these platforms make process more transactions than 70% of the sector. Their failure to implement fee systems that are dynamic, lack of SegWit and no batching all contributes to this negativity.
The CEO of Coinbase is Brian Armstrong has been responding to these concerns. It has now been announced that they will be adding SegWit, as well as batching of transactions among other proactive steps in an attempt to reduce the congestion on the bitcoin network.
Whether this will be successful or not remains to be seen.