SegWit has come a long way since its debut during the block war of 2015-2017. Despite their relative success as a bitcoin upgrade, crypto exchanges including Binance and Gemini do not remain obligated to use SegWit addresses to send bitcoin (BTC).
Segregated Witness (SegWit) was implemented in 2017 as a soft fork update that separates the “witness” data from the underlying transaction. “Explained as I am five years old,” SegWit provides a more secure and faster bitcoin, making it easier to scale the network.
While most exchanges and individuals have struggled to upgrade their infrastructure to acquire SegWit, reaching 50% of bitcoin transactions in 2019, the largest exchange, Binance, is slowing down.
Glassnode’s report notes that Binance “had an insignificant SegWit adoption rate of 10% until the end of 2021.” However, the company has “finally made a serious effort to implement SegWit by the end of 2021.” The acceptance rate is currently 50%, which is very low compared to Coinbase and FTX’s 100%.
In total, cryptocurrency exchanges occupy about 40% of the Bitcoin blockchain. However, it is important to note that Coinbase and Binance make up the majority of the block space, responsible for “25% of the block space consumed” last month. If executives like Binance or big players like Gemini fail to take full advantage of SegWit, Bitcoin will struggle to reach its true scaling potential.
Tomer Stroulitt, Editor-in-Chief of Swan Bitcoin, explains this argument:
“The fee savings that SegWit offers (as well as binding and taproot) will inevitably lead to almost universal use. They have already succeeded in significantly reducing traffic congestion and lowering charges. Ironically, however, their success so far means that we may have to wait until charges become a problem again to give late adopters the opportunity to use the pants they need to complete the transition. ”
The Glassnode report also includes a more accurate calculation for reading SegWit implementation and SegWit usage. When used on individual devices, such as exchanges, it provides a more detailed picture.
Of the 18 major exchanges surveyed by Glassnode, a third were loyal SegWit supporters at over 90% adoption levels. Two-thirds, including Binance, do their best to implement SegWit, from 50% to 80%, while the remaining six still use bitcoin addresses starting with 1 and not 3 as SegWit.
Related: 88% of all BTC transfers pay excess transaction fees
Here is a chart showing the SegWit exchange order:
Delayed exchanges are unlikely to switch to Taproot, the latest Bitcoin soft fork, anytime soon. As Strolight points out, we may have to wait for the charges to rise before waking up.