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SegWit has come a long way since it debuted during the 2015-2017 block size wars. However, despite its relative success as a Bitcoin upgrade, cryptocurrency exchanges including Binance and Gemini have not committed to using SegWit addresses to send Bitcoin (bitcoin).
Implemented in 2017, Segregated Witness (SegWit) is a soft fork upgrade that separates “witness” data from the underlying transaction.In “Explain Like I’m Five”, SegWit allows For Safer and Faster Bitcoin, making it easier to expand the network.
While most exchanges and individuals are rapidly upgrading their infrastructure to adopt SegWit, Bitcoin transaction volume reaches 50% in 2019, the largest exchange, Binance has been dragging its feet.
Glassnode Report Said Binance “until the end of 2021, the adoption rate of SegWit is only 10%.” However, it is finally “working hard to drive the adoption of SegWit by the end of 2021.” Its adoption rate is currently at 50%, dwarfing the 100% of Coinbase and FTX.
Overall, cryptocurrency exchanges consume about 40% of Bitcoin’s block space. Crucially, however, Coinbase and Binance captured the lion’s share of block space, responsible for “25% of the block space consumed” last month. If leaders like Binance, or large players like Gemini fail to fully adopt SegWit, Bitcoin will struggle to reach its true scaling potential.
Tomer Strolight, editor-in-chief of Swan Bitcoin, made the argument:
“The fee savings offered by SegWit (as well as batch and Taproot) will inevitably lead to their near-universal use. These have been successful in greatly reducing congestion and lowering fees. However, the irony of their success so far is Meaning we may have to wait until fees become an issue again before late adopters can put on the pants they need to fully switch.”
The Glassnode report also shares a more accurate measure of SegWit adoption, SegWit utilization. When applied to a single entity, such as an exchange, it provides a more detailed picture.
Of the 18 major exchanges surveyed by Glassnode, a third are true SegWit supporters, with an adoption rate of over 90%. The second third – including Binance – is doing its best to adopt from 50% to 80% of SegWit, while the last six still use Bitcoin addresses starting with the number 1, not SegWit’s 3.
related: 88% of BTC transfers have overpaid transaction fees
Below is a detailed chart of the exchange’s SegWit ranking:
Lagging exchanges are unlikely to upgrade to Taproot, The latest Bitcoin soft fork,soon. As Strolight points out, we may have to wait until fees go up before we wake up.
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