Faster & Cheaper
Two of the biggest cryptocurrency exchanges, which account for more than 10% of bitcoin trading worldwide, will be implementing a software protocol that will make those transactions faster and cheaper.
San Francisco based Coinbase, which accounts for 17 percent of all U.S. dollar bitcoin trading volume, and Bitfinex, ranked 4th globally and based in Hong Kong, announced support of the SegWit Protocol which, by freeing up space on the blockchain, makes transactions both quicker and cheaper.
Bitcoin Mania Brought Fees & Delays
During the height of the pre-Christmas bitcoin mania, transaction fees climbed as high as 30 to 40 dollars and confirmation delays could stretch into several hours and in some cases days.
SegWit adoption is good for bitcoin - if not as the ultimate solution for its slow speed and high cost, at least as a workaround for its perpetual scaling woes.
Digital signatures occupy 65% of space on the blockchain and yet they can be separated from transaction data and maintained on a side chain without compromising the integrity of the blockchain itself.
In fact, digital signatures stored on a segregated side chain solve a security problem for bitcoin known as “malleability” - so the SegWit blockchain is actually more secure.
Alternative crypto assets, such as bitcoin cash, are notorious for criticizing bitcoin for its slow speed and high fees - backhandedly complimenting it as a “store of value”, with the unmistakable subtext that it’s not practical to use bitcoin as a medium of exchange for micro-payments.
It was frustration and discord over transaction delays and rising fees that led to the fork of bitcoin cash last August, with a block size 8 times that of bitcoin, giving it the ability to process 60 transactions per second to bitcoin’s 7.
Bitfinex announced on Medium: “Today Bitfinex is delighted to announce support for bitcoin deposit and withdrawals using P2SH Segregated Witness (SegWit) addresses… The SegWit implementation means Bitfinex users can benefit from lower BTC withdrawal fees (approximately 15%) and improved processing times on transactions across the Bitcoin network.”
Coinbase has not yet fully implemented the rollout of SegWit -they announced a phased implementation over the next week with a full launch by the end of February.