By
Steve Muchoki
April 23rd, 2024
Soon after the full-SegWit support in the Bitcoin software update, the Bitcoin transactions using SegWit have doubled in just past two days.
Segregated Witness (SegWit) is one of the most desired updates in the Bitcoin Core software that has helped to speed up the transactions thereby keeping the costs relatively low. Just two days back on Feb 26., the Bitcoin Core 0.16.0 software introduced full support for SegWit. However, one of the disappointing things is that after the activation of Segwit on the Bitcoin network back in August 2017, its adoption has been relatively very slow.
Just last month in February, two major Bitcoin and cryptocurrency exchanges – Bitfinex and Coinbase – announced their support for this technology by implementing it on their platform. One good thing that has recently happened after this latest update is that there has been a noticeable and significant rise in the Bitcoin transactions on its network using SegWit.
According to the data available on SegWit.party, for the past few months, the percentage of transactions on the network stalled somewhere in between 10-15%. But since the roll-out of SegWit by the two major and exchanges and finally in the latest update of the Bitcoin Core, there has been a steep rise in the percentage of transactions growing from 15% to now at 30% just in a matter of two days.
It is said that as more Bitcoin wallet providers and exchanges continue to adopt SegWit, the number of transactions on the network will also rise simultaneously. This uptick significantly indicates the fact there has a major improvement in the transaction processing speeds and also a major reduction in the transaction costs, which proved to be a major hurdle for Bitcoin investors in the last few months.
Understanding SegWit and Its Benefits
SegWit is an improved and rather more optimized way of space utilization within the limited block size of blocks on the Bitcoin network. It is a way of efficiently bundling transactions together in a block thereby allowing for its faster processing.
SegWit impacts the Bitcoin in two ways – one is the increase in the block size limit and the other is fixing the transaction malleability bug. Increasing the block size capacity will, of course, increase the number of transactions to go through but its downside is that it would also increase the cost of operating a full node, which can impact the amount of decentralization on the network.
However, the long-term solution been seen to this is fixing the transaction malleability that further gives a boost to the more efficient version of the Lightning Network. Lightning Network is a ‘second-layer’ development build on the top of Bitcoin network which is expected to take transactions off the Bitcoin blockchain and contribute to improving the operational capacity of the Bitcoin blockchain by manifold times.
The latest adoption of SegWit is seen as a strong welcome move by the Bitcoin community and also an air of positivity and optimism is seen in the crypto markets. Such improvements provide a new pathway for future growth and help to establish a strong foundation.