One of the biggest exchanges Coinbase and one of the biggest trading platforms Global Digital Asset Exchange GDAX have announced that they have implemented Segregated Witness for Bitcoin transactions, deposits and withdrawals. GDAX, which is owned by Coinbase, said that SegWit technology is a “critical step forward in the development of Bitcoin” and said that SegWith support for transactions will be made fully available to all of their users. If you want to read more on SegWit click here to read our SegWit guide.
SegWit provides key improvements
The transition will conclude this week and will improve transaction speed and will lower fees on Bitcoin’s network dramatically. SegWit was introduced last year in August through BIP 141 (Bitcoin Improvement Proposal). The technology is designed to improve usage of block space making the Blockchain more efficient and cheaper to use.
The technology optimizes the structure of blocks and is a major improvement to Bitcoin’s protocol. Thanks to SegWit it is possible to reduce the space taken on the Blockchain and allows for more transactions to be stored in each block. The adoption of SegWit by Coinbase is expected to significantly increase the speed of the network and transactions. Because the exchange represents a huge part of Bitcoin’s transaction volume, many think that it represented a heavy load on the whole network.
Bitcoin was plagued with enormous fees
Many popular Bitcoin exchanges were doing this which caused a problem for the network and frustrated the community. However many exchanges have already implemented SegWit support, but Coinbase and GDAX were slow to adapt the technology. This lack of action on their part had frustrated users even more.
“We are excited to announce that GDAX now supports Segregated Witness (SegWit) transactions on the Bitcoin network. Over the coming days, full support for SegWit transactions will be rolling out to 100% of our customers. SegWit is a critical step forward in the development of Bitcoin and we are thrilled to support it on GDAX.”
Coinbase and GDAX account for a big part of Bitcoin’s volume. It came to a point when the community of Coinbase launched a petition urging the company to prioritize SegWit implementation over everything else. The petition also stated that the Bitcoin community is overwhelmingly in support for Segregated Wittness. Coinbase warned their users to not confuse Bitcoin and Bitcoin Cash deposit addresses, because the following change can no longer retrieve funds:
“While SegWit should help reduce fees, once we begin rolling out this change, if you incorrectly send Bitcoin Cash (BCH) to a Bitcoin (BTC) address, your funds will not be recoverable. Sending the incorrect digital assets to a deposit address will result in permanent loss.”
We've reached a major milestone! ? $BTC tx fees are now at an ALL TIME LOW. We are now seeing transactions below 1 sat / byte for the first time ever. You can send #bitcoin for ~0.1 cents ( ~100 satoshis ) per transaction. ?? ?#bitcoinisscaling #segwit pic.twitter.com/DZy7h5yYJK
— Armin van Bitcoin ⚡ (@ArminVanBitcoin) February 22, 2018
Coinbase is not the only late adopters to the technology. Last week the wallet Bitcoin Core has implemented the Segregated Wittness protocol for transactions. Bitfinex also announced that they have implemented SegWit to Bitcoin transactions. Bitfinex made a clear announcement about the advantages and features of the protocol:
“We are delighted that through this implementation we can provide our customers with Bitcoin withdrawal fees that are up to 20 percent lower, as well as faster-that-ever transaction speeds.”
This week also marked a record low on Bitcoin’s transaction fees. The all-time high was between December and January when fees were enormous ranging up to 100 dollars or more. In their blog posts, Coinbase and GDAX said that they are working to implement other scaling solutions for Bitcoin. In these solutions are included the famous Lightning Network and “Layer 2” solution.
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