The introduction of SegWit, a long-hoped for improvement in Bitcoin’s efficiency and security, is already having positive effects. As well as transactions becoming quicker, they are also becoming cheaper. Multiple exchanges have reduced their fees for Bitcoin withdrawals due to the efficiency gains of the new technology.
Binance, the world’s biggest cryptocurrency exchange, announced today that it was reducing its Bitcoin withdrawal fees by 50%. The move comes after a series of similar announcements from other cryptocurrency exchanges, putting considerable pressure on the rest to do the same or risk losing customers.
Under the SegWit, or Segregated Witness, soft fork, the signature (or “witness”) for a transaction is stored separately from the transaction block, allowing the Bitcoin blockchain to process more transactions without changing the block size.
It also allows for cheaper transactions. Yesterday Bitfinex said that “since SegWit adoption we have managed to decrease our BTC withdrawal fees by 25%, to 0.0006 BTC”, adding that it was, “excited by the improvements made possible by SegWit”.
Nano-trading platform Nanex have also reduced their Bitcoin withdrawal fees by 75%. Though they didn’t give a specific reason for the change, in response to a question on Twitter they said, “BTC network fees have dropped significantly as of late”, and that there “wasn’t a good reason to keep it so high without just being plain greedy”.
Coinbase, one of the world’s biggest cryptocurrency exchanges, implemented the SegWit technology last month. As well as being useful in its own right, it is widely seen as a necessary step towards potentially transformative further technologies like the Lightning Network. According to Coinbase Vice President Dan Romero, “SegWit, like the Lightning Network, have the potential to significantly increase the usefulness of Bitcoin as a payment network and benefit customers”.
However, Coinbase is yet to reduce its fees as a result of the adoption, a position which seems increasingly untenable.
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