Bitcoin transaction fees have begun falling as major wallet providers activate Segregated Witness, or SegWit. The blockchain analysis firm OXT reports that fewer than one in ten bitcoin transactions u
Bitcoin transaction fees have begun falling as major wallet providers activate Segregated Witness, or SegWit. The blockchain analysis firm OXT reports that fewer than one in ten bitcoin transactions use SegWit. That means most users haven't seen the benefit yet.
But the impact is visible on the network. The mempool, where unconfirmed transactions wait, shrank from about 140 million bytes to just 6 million. Daily transaction volume remained steady above 270,000 per day. Confirmations now arrive faster than before.
Developers who've tested SegWit report improvements. Andreas Antonopoulos noted that SegWit transactions can get confirmed with a fee of less than $0.3. To access these lower costs, users need either a SegWit-compatible wallet or need to receive SegWit transactions.
Hardware wallet makers moved first on integration. Ledger and Trezor both completed full SegWit support, prioritizing the change before other wallet providers. Ledger's team explained that SegWit lets hardware wallets skip certain verification steps during settlement, reducing processing time and cutting attack surface. The company documented a 60% speedup in signature operations and savings of 35% on typical fees.
"When computing a Segwit signature, the previous transactions do not need to be processed by the device, and each input is only processed once during the signature process, leading up to a 60% time optimization in the signature process. Segwit introduces the concept of block weight which changes the way the transaction size is computed by splitting the signatures in a different area — you can typically save 35% of the fee paid when sending a transaction immediately," Ledger said.
Ryan Shea, co-founder of Blockstack, described SegWit as a "Swiss Army Knife" before its activation, highlighting its potential to solve multiple problems. Developers throughout the industry expressed confidence in what SegWit could enable. Jameson Lopp at BitGo expects SegWit to provide infrastructure for layer-two networks like the Lightning Network, which could slash transaction fees.
"With the collaboration of several Lightning protocol teams, BTC transaction fees will go from $10 to under $0.01," Lopp said.
Not everyone welcomed the direction. Jihan Wu, CEO of the mining firm Bitmain, expressed concerns to The Economist that widespread adoption of the Lightning Network could centralize bitcoin payments. Payment channels, he argued, create dependencies that concentrate control.
Andreas Antonopoulos disagreed with this assessment. He argues that resisting SegWit pushes users toward centralized intermediaries instead. "Ironically, people who object to [Lightning] are vehemently against [trusted party custodial] but by resisting SegWit are actually encouraging and feeding centralization into more counterparty-risk through centralized intermediaries. Demand is already pushing us that way. The lack of a trustless alternative leaves only one alternative," he said.
