SegWit To Be Adopted by World's Two Biggest Exchanges

Bitfinex and Coinbase, cryptocurrency exchanges from Hong Kong and San Francisco respectively, announced yesterday that they will be accepting Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term and withdrawals in Bitcoin from wallets updated with 'segregated witness'. The update at Bitfinex was effective from yesterday.

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Segregated witness, or SegWit, is an update of the Bitcoin Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term. It enlarges the blocks which make up the chain, which allows for faster transactions speeds, lower transaction fees, and improved security.

It does this by separating signature and transaction data. All transactions in the blockchain are approved by a digital signature, and in the original chain these two sets of data are stored together, taking up a certain amount of storage space. By removing the signature code from the middle of the transaction data and storing it as an attachment at the end, the signature storage size is greatly reduced.

As a result of this upgrade, the 1 MB blocks that make up the Bitcoin blockchain effectively grow to a size of 1.8 MB. Larger blocks mean faster transaction times, because larger blocks support more activity.

Another advantage of this upgrade is security. Previously, signature security was flawed because the signature (known as 'witness data') didn't cover all of the transaction data, meaning that there were several methods through which it was possible to alter the signature, leading to bitcoins being lost and stolen. This weakness is known as transaction malleability. Separating the signatures makes them clearer and unmalleable.

The SegWit upgrade was activated in August of 2017, but as of now only about 12% of Bitcoin transactions are utilising it. Bitfinex and Coinbase together handle well over half of the world's Bitcoin trading volume, and so this figure is likely to grow significantly.

Bitfinex CTO Paolo Ardoino said: "By supporting SegWit addresses, Bitfinex is tackling three of the biggest crypto-enthusiast concerns: transaction fees, transaction speed, and total network capacity. We are delighted that through this implementation we can provide our customers with bitcoin withdrawal fees that are up to 20 percent lower, as well as faster-than-ever transaction speeds.”

Note that SegWit should not be confused with SegWit2x, which is a further upgrade that was contentious and eventually cancelled.