SegWit Transactions Are on the Rise, So is the Joy of Bitcoin Users
On August 24, 2017, the much awaited SegWit upgrade to the Bitcoin network was activated and with it came the promise of lower transaction fees and faster confirmation times. Now, six months after the activation, SegWit adoption is on the rise and the benefits of this network upgrade are finally being felt by active bitcoin users.
Currently, over a quarter of bitcoin transactions are SegWit transactions. This is more than twice as many as in October 2017 and the number is on the rise according to data compiled by SegWit.Party. This is translating into much lower transaction fees and a substantial increase in transaction speeds than we witnessed in the second half of 2017.
The increase in adoption is thanks to the growing number of bitcoin service providers who are implemented the network upgrade.
Moreover, version 0.16.0 of Bitcoin Core, the standard software client of the bitcoin network, was released on February 26 to provide full support for SegWit in the wallet and user interfaces, which has helped to boost SegWit adoption.
As a result of the increasing SegWit adoption, the number of unconfirmed transactions has dropped dramatically for first time in four months. Furthermore, average bitcoin transaction fees dropped from a high of over USD 50 in December to a current price of around USD 3.
It has to be said though, that the number of confirmed transaction did not solely drop due to the increase in SegWit adoption but also because outstanding bitcoin buy orders were clogging the network at the end of 2017 when bitcoin was close to its USD 20,000 all-time high and because of bitcoin’s price drop, fewer people are buying bitcoin now than in late 2017.
Nonetheless, in light of the slow transactions times and high fees we witnessed in November and December of last year, this is a welcome sight to the active bitcoin community who actually use bitcoin as a spending currency and to send money abroad.
Furthermore, the rise in SegWit adoption is giving a clear signal that the bitcoin community wants to see bitcoin succeed, not only as a digital-gold like investment asset but as the world’s leading alternative currency.
Segregated Witness, more commonly referred to as SegWit, is an upgrade to the Bitcoin network that has been activated in August 2017 to provide a solution to bitcoin’s scalability challenges and to eliminate the issue of transaction malleability.
SegWit aids bitcoin’s scalability by increasing the effective block size without increasing the block size limit. Instead, SegWit removes signature data in each block to increase the number of bitcoin transactions that can be put into each block. This leads to the Bitcoin blockchain being able to process more transactions per second that before.
Prior to February, dozens of bitcoin wallets and exchanges – including Electrum, Ledger, LocalBitcoins, and Wirex – have already implemented SegWit much to the appreciation of their customers.
Bitcoin wallet and exchange Luno’s SegWit announced SegWit support on February 14 and popular digital currency exchange Bitfinex made its announcement on February 20.
On February 23, Coinbase announced that it is implementing SegWit on both its Coinbase wallet and its GDAX exchange.