The introduction of SegWit was meant to lower the high transaction costs in Bitcoin network and this could be coming to fruition after increased adoption of the protocol.
A few months ago, two of the biggest crypto trading platforms, Bitfinex and GDAX announced their adoption of SegWit protocol, signifying the lowering of transaction fees for Bitcoin transactions to reasonable levels. On February 20th 2018, Bitfinex announced the adoption of SegWit and three days later, GDAX announced a phased rollout for all its customers. CCN reports that by early March, both exchanges had successfully transitioned their entire infrastructure from legacy Bitcoin addresses to SegWit compatible ones.
The two exchanges joins ShapeShift which a popular service that which allows for crypto-to-crypto trading. The company was one of the first exchanges to adopt SegWit protocol in 2017 when few were willing to adopt it. On February 22nd 2018, the company announced support for transaction batching. The support for both SegWit and batching, means that ShapeShift is currently using the most efficient means of transferring Bitcoin between wallets.
Clamor for Reduced Bitcoin Fees
The widespread adoption of SegWit comes after a widespread cry from the crypto community about the high transaction fees. Finally, Bitcoin came up with the SegWit and batching capabilities to reduce the transaction fees but exchanges remained adamant on adoption.
However, increased pressure from traders has seen the major exchanges adopting SegWit and batching. In a blog post on 20th February 2018, Bitfinex stated that it was upgrading to SegWit wallets to lower withdrawal fees and improve the transaction experience after widespread customer feedback.
Bitfinex’s CTO Paolo Ardino said,
As a premier exchange, Bitfinex is committed to improving its market-leading offering for our loyal and discerning customers. SegWit provides not only an immediate benefit for users, but also a foundation for future Bitcoin development.
The CTO argued that through adoption of SegWit addresses, Bitfinex platform was addressing three of the topmost crypto traders’ concerns; transaction fees, transaction speed, and total network capacity. Bitfinex said that through the implementation customers would pay 20 percent less Bitcoin withdrawal fees and experience faster than ever transaction speeds.
GDAX also published a similar blog with the company’s product manager, Alex Sieke, acknowledging the need to lower the transaction costs and improve efficiency as the main reasons for adoption of SegWit.
The increased SegWit adoption has had a remarkable impact on Bitcoin network fees. Perhaps buoyed by reduced network congestion, cryptocurrency exchanges are now competing to offer the lowest fees.
Is the increased adoption of SegWit the answer to the high Bitcoin transaction fees? Let us know your thoughts in the comments section.