Coinbase have announced that the site will now be implementing SegWit on Bitcoin deposits and withdrawals.
The transition is being implemented over the coming week, and should improve transaction speeds and lower fees. SegWit was introduced August of last year through BIP 141 (Bitcoin Improvement Proposal), however Coinbase was slow to adopt the technology. The lack of implementation of the technology was increasingly frustrating for Coinbase users, who launched a petition calling for the exchange platform to prioritize SegWit implementation over other upgrades. The petition noted that the Bitcoin community is “overwhelmingly in support” of SegWit, and was signed over twelve-thousand times.
Segregated Witness or SegWit was a major improvement to the Bitcoin protocol. By redefining the structure of blocks, (with one block changing from 1MB to become four million units) it became possible to greatly reduce the space taken on the blockchain by transaction and witness data. The change allowed more transactions to be stored in each block, making the blockchain more efficient and cheaper to use.
Coinbase is not alone in recently adopting the technology. Last week the Bitcoin Core wallet upgraded to allow SegWit Transactions, which was followed by an announcement from Bitfinex that they too were now utilizing SegWit on Bitcoin transactions. Bitfinex were clear of the advantages of the protocol upgrade, stating in their blog post:
“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-than-ever transaction speeds.”
Coinbase were not so jubilant regarding the upgrade, but they did offer a clear warning to users not to confuse Bitcoin and Bitcoin Cash deposit addresses. This is because following the change to SegWit the exchange is no longer able to 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. “
With Coinbase adopting SegWit it is expected there will be a significant increase in the speed o the Bitcoin network, as the exchange represents a huge proportion of transactions. Sergej Kotliar, CEO of mobile top-up service Bitrefill, noted that the number of unconfirmed Bitcoin transactions plummeted at the same time that Coinbase was experiencing an outage, which suggests that Coinbase transactions were a heavy load on the network. The veracity of this claim has not been confirmed, but many are welcoming Coinbase’s adoption of SegWit regardless, hoping for both a faster and cheaper service.
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Last modified: May 20, 2020 9:04 PM UTC