Coinbase And Bitfinex Add SegWit Support For Bitcoin- Unkrypted

by Ricky Makan Co-Founder at Unkrypted

On Tuesday (20th February 2018), cryptocurrency exchange Coinbase and Bitfinex has declared the implementation of P2SH Segregated Witness (SegWit). According to the companies’ tweet, the consumer will experience better transaction processing times and lower fees across the Bitcoin network.

This procedure began in the month of December for Coinbase when Vice President & General Manager Dan Romero pointed out to shareholders and clients that the exchange would implement the SegWit protocol in early 2018.

The protocol, an oft-debated measure launched as a means of scaling Bitcoin to meet up bigger demand and it is expected to decrease congestion in the cryptocurrency’s network that results in less transaction times & lower fees.

How Will Segwit Assist The Exchanges?

It’s a Bitcoin protocol enhancement that facilitates scaling. The SegWit execution will provide Bitfinex and Coinbase users with lower transaction fees & enhanced processing times on transactions across the Bitcoin network. This happens by increasing block size limits and unraveling signature information from transaction data.

It will also efficiently fix transaction flexibility, a potential attack based on the variation of transaction IDs earlier to network verification. Further, it also lays the groundwork for potential Bitcoin expansion efforts like the implementation of Lightning Network, which will allow the network to process millions to billions of transactions per second.

Looking Ahead

Moving forward, the question is what is going to happen as the Bitcoin network continues to grow up. A hard-coded edge on the size of blocks limits how many transactions can process per second.

Some people in the Bitcoin community wanted to just raise the block size like in Bitcoin cash. Instead of increasing the utmost block size, SegWit divides cryptographic signatures from the rest of the blockchain information, so these signatures are not counted against that one-megabyte block-size limit.

Coinbase

Romero said the exchange has cautiously considered the implications of adopting SegWit.

He stated

“In terms of our engineering priorities, securely storing client funds remains our top priority. Our next priority is to make sure that our platform remains performant throughout the period of peak volume.”

The adoption of SegWit is a massive responsibility for the Coinbase because its platform is much bigger than most other virtual currency exchanges. The exchange has millions of active clients each month, and it accounts for the main portion of all Bitcoin trading. This means that its decision to adopt SegWit could have consequences on the entire cryptocurrency world.