Today, two of the world’s largest cryptocurrency investment platforms,CoinbaseandBitfinex, both announced that they were adopting support for Segregated Witness (SegWit) protocols for bitcoin (BTC) traded on their exchanges.
In itsannouncement, Bitfinex stated, “The SegWit implementation means Bitfinex users can benefit from lower BTC withdrawal fees (approximately 15 percent) and improved processing times on transactions across the Bitcoin network.” The exchange didmake clear that the support for bitcoin deposits and withdrawals using pay-to-script-hash (P2SH) SegWit addresses were the only ones thus far slated for bitcoin and not applicable to bitcoin cash (BCH).
Coinbase, on the other hand,tweetedthat it had finished testing for SegWit for Bitcoin. It will phase in the launch, with the goal of “targeting a 100% launch to all customers by mid next week.” Coinbaseaffirmedits plan for a 2018 SegWit implementation on December 15, 2017 and seemingly delivered on the SegWit statements itmadeon February 13, 2018.
Reasonsfor the support of using SegWit addresses are clear. Prior to the activation of the Segregated Witness soft fork in August 2017, there were concerns about thescalabilityandmalleabilityof Bitcoin due to the size limit of the blocks and a potential manipulation of the transaction ID. These concerns had been a source of debatefor yearsuntil the “soft fork” allowed for protocol upgrades to the software.
While many hard and soft walletsalready adopted support for SegWit protocols, the move by both companies is huge given the volume of bitcoin traded on each platform. At the time of this writing, both Bitfinex and Coinbase’s exchange, GDAX, accounted fornearlyone tenth of global bitcoin trades over the previous 24 hours. This number underestimates the impact on BTC trading volume as it does not include Coinbase’s wallet platform. Both Bitfinex and GDAX arerankedas top 10 exchanges in the world by trading volume, at 5th and 8th, respectively.
The positive news for both exchanges comes at a time of mounting pressure from the public. Coinbase hasfacedcommunity backlash on higher Bitcoin transaction fees, customers’ inability to withdraw funds to PayPal accounts and credit cards being disabled as a payment method for U.S. customers.
Bitfinex’s announcement comes on the heels of atumultuousend to 2017 and a rough start to 2018, inclusive of new account registration issues, a CFTC subpoena and firing of auditor Friedman LLP.
With the announcements of SegWit adoption for Bitcoin, it seems that Coinbase has addressed a major issue for its consumer base, and Bitfinex has been able to release some much-needed positive news for its customers amidst its recent controversies.
This article originally appeared on Bitcoin Magazine.