In a tweet on Tuesday Coinbase confirmed that their development team was in the final testing phase of their SegWit integration for Bitcoin for the exchange.
What is SegWit?
SegWit is the process by which the block size limit on a blockchain is increased by removing signature data from Bitcoin transactions. When certain parts of a transaction are removed, this frees up space or capacity to add more transactions to the chain.
Segregate means to separate, and Witnesses are the transaction signatures. Hence, Segregated Witness, in short, means to separate transaction signatures.
SegWit attempts to ignore the data attached to a signature by stripping off the signature from within the input and moving it to a structure towards the end of a transaction. This would increase the 1 MB limit for block sizes to a little under 4 MB. In addition to slightly increasing the capacity size of blocks, SegWit also solves the problem where a receiver could intercept and modify the sender’s transaction ID in a bid to get more coins from the sender. Since the digital signature would be detached from the input, the unscrupulous party would have no way of changing the transaction ID without also nullifying the digital signature.
This means that if a transaction from a SegWit wallet to another SegWit wallet would theoretically be able to be completed faster and with lower fees due to less network congestion.
Coinbase first confirmed that SegWit would be implemented in December 2017, but did not originally give the public a date, just that it would be rolled out in 2018. The news that the team has come this far sooner than later is being heralded by SegWit supporters and comes a little before the expected addition of SegWit wallet functionality to Bitcoin Core as completed by Pieter Wuille. This is expected in the next release, which has been mapped for 1 May 2018.
This is great news for Coinbase users, especially as Bitcoin appears to be regaining some of its traction from December/January, which could see fees rise again up to USD $30.00.
Tiaan Wolmarans is a cryptocurrency investor and trader, airplane pilot, musician, and writer.
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