After months of prevarication, Coinbase has announced that it will add Segwit support to its bitcoin wallets. The much anticipated and long overdue move will go some way towards reducing transaction fees for users of Coinbase and GDAX, assuming it follows suit. Coinbase has come in for repeated criticism over the inefficient way it handles bitcoin transactions, costing itself, and ultimately its users, unnecessary fees. Due to the dominance of Coinbase, it is hoped that Segwit activation will help achieve the tipping point required for the technology become the default setting throughout the industry.
Also read: How to Calculate Bitcoin Transaction Fees When You’re in a Hurry
Coinbase Gets Its Act Together
In a tweet on Monday, Coinbase issued the news their customers have been waiting months to hear: “Our engineering team has begun the final testing phase of SegWit for Bitcoin on Coinbase. SegWit compatible Bitcoin sends/receives will be available for customers in the next few weeks.”
By any reckoning, Coinbase has taken its sweet time over introducing Segwit compatibility to its bitcoin wallets. The scaling technology helps to reduce the median size of each bitcoin transaction, thereby enabling more data to be squeezed into each block. With bitcoin transactions priced per byte, smaller transactions means lower fees. Despite Segwit being backwards compatible, and thus not the riskiest of code changes to implement, Coinbase has been dragging its heels for months.
In fairness to the exchange, which has custody over billions of dollars of institutional assets, it has a duty of care to its customers not to screw things up. But as Coinbase dragged its heels over Segwit while CEO Brian Armstrong waxed lyrical over pet ethereum projects, the bitcoin community accused the company of having its priorities all wrong. High fees have been a bugbear of bitcoiners in general, and have been of particular concern to users of r/Bitcoin. Stung by reminders of bitcoin’s formerly low fees, a luxury still enjoyed by bitcoin cash, they’ve been desperate for good news on the fee front.
Segwit Adoption Is Still Low
Segwit isn’t a magic bullet that does away with high bitcoin fees, but it automatically shaves at least a third off the median fee, which is a start. Fees have been dropping in general lately, as bitcoin has been dropping, and today stand at around 130 satoshis per byte ($6) on average. Segwit adoption, meanwhile, while on the up, still stands at a pitiful 16%, despite the scaling technology having been available for six months.
When Coinbase finally adds Segwit in the coming weeks it will be interesting to see what effect this has on the overall figure. Once that’s done, all Coinbase needs to do is start batching its bitcoin transactions and then the community might finally cut it some slack.
Do you think Coinbase adoption of Segwit will spur other platforms into following suit? Let us know in the comments section below.
Images courtesy of Shutterstock, and Segwit.party.
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