Coinbase has announced that henceforth the site will now implement SegWit on Bitcoin deposits and withdrawals.
The transition will take place in the coming week and should improve transaction speed and lower fees. SegWit was introduced in August last year at BIP 141 (Bitcoin Improvement Proposal), but Coinbase is slow to apply technology. The lack of technology implementation is all frustrating for Coinbase users, which launched the petition calling to prioritize SegWit implementation instead of other updates. The petition states that the Bitcoin community is the “overwhelming support” of SegWit and has signed more than twelve thousand times.
Individual witnesses or SegWit were a major enhancement to Bitcoin’s protocol. By redefining the block structure (block of 1 MB to 4 million units), it became possible to greatly reduce the space taken on the blockchain by transaction and witness data. The change enabled multiple transactions to be stored in each block, making the blockchain more efficient and cheaper to use.
Coinbase is not just about the recent adoption of technology. Last week, Bitcoin core portfolio was upgraded to permit SegWit transaction, followed by an announcement to allow Bitfinex SegWit, which is also used in Bitcoin transactions. Bitfinex did not have the advantage of updating the protocol and said on its blog:
“We are grateful that through this implementation we can offer our customers Bitcoins rates available up to 20% lower and faster transaction speed than ever before.”
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 of the Bitcoin network, as the exchange represents a vast 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 integrity 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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