The main cryptomoney exchange, Binance, will start accepting deposits made with Bitcoin wallets using SegWit.
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The scalability problems in the Bitcoin Blockchain can cause many inconveniences to its users. Those who have to face high commissions and long waits to execute a transaction at BTC. This is why the SegWit protocol was created, as an attempt to reduce these problems. Making the news that the Binance exchange starts working with SegWit in the Bitcoin repositories, one of the most important in recent times.
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What is SegWit?
To understand the relevance of this news for the crypto world, we must start by understanding what SegWit is. SegWit is short for Segregated Witness, a protocol proposed by the cryptosystem company Blockstream and the Bitcoin Core team, as a new format for executing transactions in the Bitcoin chain.
SegWit was integrated as a soft fork into the Bitcoin chain. This means that it is an optional enhancement that may or may not be adopted by cryptomoney users. It aims to provide greater malleability to the transactions of the crypto-currency, and to address the problem of scalability in the same.
To solve these two problems, SegWit segregates the Bitcoins Scripts and the cryptographic signatures of the blocks with the transactions. This has the effect of providing an additional barrier to any attempt to manipulate BTC transaction serials. It also increases the speed of Bitcoin transactions, while lowering the fees paid, increasing the size of the blocks to 1.8 MB from the original 1MB limit.
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However, despite the advantages of SegWit, as it is an optional update it is not accepted by all users and companies. In fact, until now the largest cryptomoney exchange in the world, Binance, had not incorporated support in its platform for deposits with wallets that make use of SegWit. Although it did have support for withdrawals with the protocol.
This decision will allow all exchange users to send money to SegWit wallets (bech32) without any inconvenience. Despite this, Binance is responsible for clarifying that „if incompatible assets are incorrectly sent to the address, their funds will not be recoverable and will result in a permanent loss“.
The fact that Binance is starting to work with SegWit is one of the most important news of the last weeks for the crypto market. It opens new possibilities for the use of this protocol in the Bitcoin chain. And serving as a stimulus for its adoption, which could end up being the definitive solution for the scalability problem.