A year and a half later: why did SegWit not become popular?

News ,

Only 36% of all transactions actually use this solution to scale the Bitcoin network in practice. Why is that?

More than a year has passed since the scalable SegWit solution (Segregated Witness – implemented protocol update, the task of which is to solve the problem of the plasticity of transactions in the Bitcoin network and increase its throughput) was activated on the Bitcoin network.

Despite this, only 36 percent of all transactions actually use it in practice.

Why is that?

This is largely due to the fact that, like any backward-compatible update (otherwise called a “soft fork”), SegWit ensures that network members who have not upgraded to the same software can still follow the same network only with a less limited set of rules.

As a result, the exchanges and users postponed the transition to the inclusion of SegWit transactions, despite the fact that when sending payments in Bitcoins, this gives a certain advantage.

Approaching the release of SegWit as early as August 2017, the fundamental differences were created by competing parties who suggested various options for using the solution for the world’s first cryptocurrency.

Indeed, since 2017, the community segment that didn’t approve SegWit focused on an alternative cryptocurrency called Bitcoin Cash (currently on some exchanges referred to as Bitcoin ABC due to the recent split of the network into two competing blockchains).

Although there are bitcoin mining companies that were previously strongly opposed to SegWit activation, in particular, the industry giant Bitmain, financial incentives for miners to verify transactions with SegWit support are now hard to ignore.

Since operations with SegWit support account for almost 40 percent of the Bitcoin network, this means that transactions intentionally excluded for ideological reasons will reduce the overall reward for mining provided to miners for checking the new block.

AsicBoost, described as a “mathematical trick,” is a cryptocurrency mining software that allows Bitcoin miners to perform the calculations needed to create new blocks and check transactions on the blockchain 20 percent faster than average speeds.

The technology patented by Bitcoin Core developer Timo Hanke and Sergio Demian Lerner in 2014 recently became publicly available to all miners for use under the Blockchain Protective Patent License.

However, to use firmware without a license or detection, miners must deploy an alternative version of the technology called “hidden AsicBoost”, which is incompatible with SegWit for reasons related to how SegWit payments are recorded and swapped into blocks.

Thus, as early as the end of October 2018, when Antpool appeared to have excluded transactions with SegWit support for about one week, some representatives of the cryptocurrency community returned to the old charges against Bitmain, which allegedly impedes the development of SegWit.

All these factors together have become a certain brake on the development of, in fact, a very useful solution to the problems of scalability of the Bitcoin network SegWit. However, 40% is also not bad, more – more …

Leave a Reply

Your email address will not be published. Required fields are marked *