Cheap bitcoin transactions and SegWit on a roll
Low transaction fees
After a couple of months of extremely expensive transactions fee on the bitcoin network due to the insane demand, we have finally started to see the fees dropping. From costing as much as $40 in December you can now get your transaction mined into a block for less than a dollar, a drop of more than 90%. According to the website estimate.fee, the recommended fee to get your transaction included within the hour is just 4 satoshis/byte or $0.12 for a standard transaction.
This also undermines a lot of the altcoins that saw huge gains mainly because they offered cheaper and faster transactions, such as Bitcoin Cash for example. Now that bitcoin has even cheaper fees than some of these competitors, bitcoin has already started to regain its share of the total market cap of all cryptocurrencies💸
However, the main reason for this price drop in fees is of-course the cooldown of the crypto-mania resulting in fewer transactions being done. When so many want to transact at the same time the number of unconfirmed transactions skyrocket and the fees with it. This is because the users willing to pay a higher fee get their transactions confirmed quicker by the miners.
Another big reason is the increasing adoption of the much-needed upgrade to Bitcoin called Segregated Witness, (SegWit). This upgrade was implemented through a soft fork, meaning that it’s not mandatory for the wallet providers to upgrade their software. One purpose of the upgrade was to mitigate a size problem with the blockchains limitations. By splitting the transaction into two parts, moving the signature to the end instead, thus saving space and increasing transaction speed.
The adoption of this upgrade has been slow though. Exchanges and companies dealing with bitcoin have been struggling with onboarding all the new customers flooding into the space. This coupled with the fact that the fees are paid by the users and not the companies resulted in it fallen far down on the priority list of many companies.
However, an uproar from the community calling for an exodus from exchanges that didn’t implement the upgrade seems to have worked. Bitfinex and Coinbase, two of the largest exchanges did yesterday announce their support for SegWit. Bitfinex has already implemented the upgrade while Coinbase is planning full launch by next week. This is great news for Bitcoin and will result in even lower fees and faster transactions since these two exchanges count for a huge chunk of the daily transactions being broadcasted to the network. At the moment 14% of the daily transactions are SegWit, according to the website segwit.party. But with this news, that number will rise a lot the upcoming weeks and hopefully more exchanges and wallet providers will follow suit and implement this upgrade.
If you want to learn more about Bitcoin and this new revolutionary technology called the blockchain our Beginner guide is the perfect start! 🚀