Bitcoin Trading Volume Via SegWit Hits 90%

Colin Muller

As much as 90% of bitcoin - in terms of amount of value - being sent over the Bitcoin (BTC) network is sent using the optional SegWit (or Segregated Witness) protocol, according to the bitcoin data tracking site p2sh.info.

Despite this, SegWit these days accounts for “only” about 40% average of total number of Bitcoin transactions, excluding the amount sent - although its usage has spiked to over 50% in recent months, and currently sits at 45%.

seg2.png(source: p2sh.info)

It is difficult and speculative to try and account for the disparity in figures. SegWit adoption has been increasing over the past year, and most of the largest cryptoasset exchanges already support it - with more, such as Gemini, on the way supposedly in Q1 of this year.

seg1.png(source: p2sh.info)

Whatever the case, the increased adoption during 2018 has probably helped contribute to precipitously falling fees on the Bitcoin network, along with other things such as transaction “batching,” as CryptoGlobe recently reported.

SegWit

SegWit was introduced into the Bitcoin blockchain as a “soft fork” option during the summer of 2017, and thus is backwards-compatible with non-SegWit-running Bitcoin nodes and addresses.

SegWit was developed as both a scaling and a security solution: By removing the signature data (the “witness” data) from a Bitcoin block, SegWit allows about twice as many transactions to be carried on a 1MB block (the mechanics are pretty complicated); while also removing the block’s “malleability” by precluding the possibility for a signature to be maliciously changed.

The use of SegWit has long been a political question, especially between the Bitcoin and Bitcoin Cash (BCH) communities, with the latter preferring the on-chain scaling of larger block sizes.

The question of SegWit in the context of on- or off-chain scaling is critical, because innovations brought by SegWit allow the off-chain Lightning Network to be possible. This foundational argument - to scale on-chain or off - is what lies at the heart of the long-standing dispute between BTC and BCH supporters.