It seems like the cryptocurrency news today and this morning are mostly focused on exchanges. After we saw that Binance launches its new fiat gateway for Latin America, we can now also see that the BitMEX exchange enables native support for its segregated witness (SegWit) addresses for Bitcoin withdrawals. This lets users pay lower transaction fees.
An official announcement on December 12 showed that the BitMEX exchange now allows its users to withdraw Bitcoin to Bech32 addresses, which are the ones that natively support the SegWit standard.
The announcement fully explains how and why BitMEX exchange enables this support. It also details that the Bitcoin network currently supports three address formats. The first one is Bitcoin’s original address format which is pay to public key hash (P2PKH) which starts with a 1.
On the other hand, the second format is the pay to script hash (P2SH) which lets users send BTC to addresses secured through a script without even knowing details about it. This works like a multi-signature wallet. Lastly, the Bech32 format is the third and known as the native SegWit format which starts with bc1 and allows users to take advantage of SegWit’s higher efficiency and lower fees.
As BitMEX exchange enables its native SegWit support, it also showcases the potential benefits in an announcement which reads:
“The key advantage of Bech32 addresses is that transaction fees can be saved when spending Bitcoin, which was already sent to a Bech32 address. Therefore this upgrade will not directly result in fee savings when customers withdraw from BitMEX, however in the next transaction, when the bitcoin already withdrawn from BitMEX is spent again, our customers may benefit from lower transaction fees.”
The exchange also explains that when spending from an address which is not in the Bech32 format, the user adds around 20 bytes of data to the transaction. The lack of data in the native SegWit transactions saves fees and allows the network to scale and expand more.
As analysis shows, native SegWit spending saves about 37% when compared to traditional transactions as well as 17% when compared to non-native SegWit transactions. The next wallet upgrade planned by BitMEX is enabling non-native SegWit support on its P2SH addresses.
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