Is Segregated Witness the Final Salvation of Bitcoin?

For new Bitcoin users, Segregated Witness may seem like just a fancy term. But for those who really know the business, it means something more. Segregated Witness is a new way to improve the current state of the Bitcoin network, and it hopes to at least solve the current high Bitcoin transaction fees and network scalability issues.

Segregated Witness is a soft fork that does not disrupt the existing Bitcoin network. It significantly reduces transaction fees by reducing the byte size of transactions, all while increasing the network's transaction capacity, which is undoubtedly an important solution for Bitcoin's scalability.

Dan Romero, Vice President of Coinbase, said:

Segregated Witness is an important step in scaling the Bitcoin network. We will continue to invest in Bitcoin infrastructure and will work to improve Bitcoin transaction batching and UTXO (unspent transaction output) management.

Just a month ago, Bitcoin’s high fees were a hot topic, with the community and some media outlets talking about the exponential rise in cryptocurrency fees during 2017. This was certainly not the best press a cryptocurrency could get, and the media’s heavy criticism did not help boost confidence in Bitcoin.

But now, the situation will gradually improve. More and more Bitcoin service providers are starting to run Segregated Witness addresses. What does this mean for end users?

The increase in SegWit addresses has resulted in a significant drop in transaction fees, typically between 30% and 40%, which has forced more transactions to use the SegWit protocol. A month ago, only 15% of transactions used SegWit. This massive adoption of SegWit by users and Bitcoin service providers is unprecedented, with the world's largest cryptocurrency exchanges, such as GDAX/Coinbase and Bitfinex, adopting SegWit in their services.

As a direct result, Bitfinex reduced its Bitcoin withdrawal fees by 25%, and GDAX/Coinbase transfer fees also dropped significantly. In addition, Binance and Kraken, two large exchanges, also have a trend of reducing fees. This is just the beginning, and in the near future, Segregated Witness will be adopted by more exchanges and service providers.

It’s clear that the Bitcoin network has a brighter future as it improves. High costs and unsustainably high fees will hopefully become a thing of the past, and with the advent of new blockchain technology, you won’t have to pay $50 per transaction anymore.