Coinbase, Bitfinex and another exchange, GDAX, have now implemented an upgrade known as the Bitcoin Scaling SegWit. According to the companies’ social media posts, the implementation of the upgrade will allow users to benefit from faster transaction times and reduced transaction fees.
As for Bitfinex, they have confirmed that the SegWit has already been implemented and works for all their clients who are in possession of Bitcoin. On the other hand, Coinbase has tweeted saying that they have only just recently completed the final steps to the implementation and that it will be fully launched in the coming days.
Coinbase Predicted the Upgrade
Back in December 2017, Coinbase had already mentioned their intention to adopt the SegWit protocol when the company’s director, Dan Romero, told its users and investors that the exchange would be testing out the new protocol in early 2018.
The new protocol is aimed at solving issues surrounding the scalability of Bitcoin by improving transactions speeds and costs, all while also reducing network congestion. It should be noted that, as of late, Bitcoin transactions have slowed down significantly, and costs have reached $34 per transaction.
Moreover, the price increase has occurred precisely during a spike in the network’s activity. This has lead to public outcry and a petition that garnered nearly 12,000 signatures in favor of implementing the SegWit protocol.
What You Need to Know About SegWit
The “Segregated Witness” or “SegWit” is an improvement proposed by the Bitcoin Core team presented in the form of a “soft fork”. In essence, the update works perfectly in conjunction with the existing technology without having the split the chain, even for users who have not recently upgraded their software.
Therefore, implementing the new protocol is the best possible solution to allow for faster transactions and reduced fees on Bitcoin’s network. SegWit makes it possible to increase the size of each block by separating transaction data from the signature data.
The Limits of the “Segregated Witness” Protocol
The new protocol will significantly increase the network’s capacity if all transactions use it. It should be noted that the SegWit protocol can considerably increase the number of transactions that can be processed within a single second. It provides a more effective solution to the malleability of transactions and makes it easier to spot potential cyber-attacks.
Still, it is important to know that the SegWit protocol is not a permanent solution. As the network continues to grow, eventually, SegWit will no longer be an effective tool and other new upgrades will need to be implemented to keep up with the growth of the industry.