SegWit Adoption on the Rise, Reduces Bitcoin Transaction Fees
The recent SegWit upgrade at major bitcoin exchanges aimed at speeding up transactions is clearly working as intended, with adoption reaching new highs and doubling in under 48 hours to above 30 percent of all transactions.
The popular Bitcoin Core 0.16.0 software upgrade, released on February 15, 2018, had started the rollout for full SegWit support in the wallet and user interfaces. August 2017 saw the SegWit release, but it was only after these recent upgrades that it began to gain some traction. The number of SegWit enabled transactions have increased recently as some key service providers and cryptocurrency exchanges have integrated support.
Segregated Witness, or SegWit, is a more optimized way for utilizing available space in each block on the blockchain. It achieves this by bundling transactions together and thereby enabling faster processing.
SegWit Adoption Gathers Pace
According to data available at SegWit.party, there has been an increase pushing the transaction proportion to more than 30 percent over the Bitcoin network. Consequently, the higher utilization has led to a decrease in the number of pending transactions in the mempool. As there is less pending workload on the network, it has also led to a significant decline in transaction fees.
Segwit percentage over the past seven days, Source: SegWit.party
SegWit is important for the bitcoin blockchain network as it first dynamically adjusts the block size limit, from 1MB, and also fixes the transaction malleability bug.
Two of the largest cryptocurrency exchanges, Coinbase and Bitfinex already announced their upgrade to SegWit.
Bitfinex, on February 20, 2018, had announced that it was upgrading its user wallets to SegWit. Later, on February 23, 2018, Coinbase followed suit and said that it would do a phased rollout of SegWit upgrades for all its users. Both exchanges cited that upgrading to this new technology would help lower BTC transaction fees for their users and also help in improving transaction time on the platform.
Bitcoin developer and Metaco CTO Nicolas Dorier said in 2016, “Segregated Witness is a net win, there is not any downside to adopt it at all,” further adding, “I am also very excited by the new method to sign transactions, which now includes the value of outputs being spent. This is huge from a security perspective for web wallets and hardware wallets, as it prevents (the) user from adding too much fees by mistake. And last but not least, it increases the capacity of Bitcoin. I expect Segregated Witness adoption to follow an ‘S-curve,’ (I believe) wallets will jump on it (SegWit upgrade) very quickly.”
The SegWit upgrade has been well received in the blockchain and cryptocurrency industry, drawing praise from several developers who believe that in recent coming months, more transactions will adopt SegWit. Currently, the total percent of SegWit transaction stands at 30 percent, but if there is any significant change to easing the traffic on the blockchain network, then it must be ideally around 60-65 percent of the total transactions.
Brain Amstrong of Coinbase believes SegWit, along with the Lightning Network, will solve scalability problems on the network and said, “From learning more about SegWit I think we should activate it. It’s probably the best path forward for Bitcoin at this point. Let’s come together and move forward as an industry. Activating SegWit can help us get there, and it has a number of good features.”