21.10.2021

Binance introduces SegWit support. What does this mean for users?

One of the largest cryptocurrency exchanges, Binance, is introducing Segregated Witness or SegWit support for Bitcoin deposits.

As a reminder, SegWit, released in 2017, is an update to the main cryptocurrency protocol designed to scale the Bitcoin network and fix related bugs. SegWit is known for separating signatures from transaction data. This protocol update allows more transactions to be stored in a single block, thereby increasing the throughput of BTC.

Recall that SegWit is directly related to Bitcoin blocks, the topic of which we discussed in detail in a separate article. With the help of the update, each of them began to contain information about a larger number of transactions, which had a positive effect on network performance.

Still, the technical features of the blockchain of the first cryptocurrency are limited, and the block is ideally added to the chain every ten minutes. Accordingly, the update retained this feature, but allowed the network to process more transfers.

We have checked the current data on Bitcoin behavior. Today, the rate of the first cryptocurrency is at the level of $ 26,861, which is 3 percent lower than a day ago. At the same time, the capitalization of the Satoshi Nakamoto project is balancing at the level of half a trillion dollars. Here is a graph of the value of BTC over the past two weeks. During this period, Bitcoin has risen in price by 40.2 percent.

New upgrade for Binance

Initially, SegWit support was introduced by Binance only for withdrawals, but recently it has also expanded to include deposits from exchange customers. Already, users can choose SegWit addresses for transferring coins. The main feature of the so-called Bech32 address format is that the latter begin with “bc1” and are not case sensitive, that is, there is no difference between uppercase and lowercase letters. The format was introduced in Bitcoin Core 0.16.0. Here is a quote from Cointelegraph’s official marketplace announcement.

Please note that SegWit should help reduce fees. However, if you incorrectly send incompatible assets to the address, your funds will not be returned and this will lead to their irrevocable loss.

That is, users need to be even more careful when working with cryptocurrencies, because if something happens, coins can be lost.

Note that this is a very important note: if you send another cryptocurrency or the same bitcoins to an incompatible address, your coins will be lost. Quite often this seemingly very simple rule is ignored.

We have already written about similar stories, when elementary human inattention led to the loss of a large amount of funds. For example, in March of this year, a trader lost the equivalent of $ 9,000, because he most likely mistakenly left an order to buy another cryptocurrency instead of Bitcoin. Naturally, the money could not be returned.

According to the transactionfee platform, roughly two-thirds of Bitcoin transactions are already using SegWit. That is, the upgrade from Binance is just a tribute to the progress in the development of the main cryptocurrency. While it is considered more of a store of capital than a fast payment system, the bandwidth and low fees in BTC are also very important.

We have clarified the latest information on fees in the Bitcoin network. Yesterday, the average cost of transferring the first cryptocurrency on the blockchain was the equivalent of $ 8. At the same time, the indicator of the Ethereum network was almost two times lower.

We believe that the initiative of the management of the cryptocurrency exchange Binance is commendable. Of course, a lot of time has passed since the release of SegWit, but in this case, implementing the technology is still better than ignoring it. We hope that in the future the situation with commissions in the network of the first cryptocurrency will improve. However, when Bitcoin is once again in the center of mass attention as a means of investment, transfers in this cryptocurrency can easily rise in price several times.

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