Bitcoin [BTC]: SegWit transactions’ volume peaking on the Bitcoin network

The volume of transactions using the soft fork protocol upgrade, SegWit [Segregated Witness] protocol, in the Bitcoin network, hit a whopping 89.70% in the first week of February this year according to the tracking site, p2sh.info.

During the beginning of 2018, SegWit transactions accounted for a mere 15%, doubling up post-February. The percentage shot up to over 50% in October of the same year. The usage, however, stalled for more than five months, after mostly because of the long bearish trend in the crypto space and remained below 45% of the total transaction.

A year later, as of 12th February 2019, out of a total of 258459 transactions on the Bitcoin network, around 45.91% were executed using SegWit protocol. The transaction fee paid accounted for 42.23% and the volume of transactions done using the soft fork protocol, slipped to 82.18% on the same day, cladding a block space of 44.74%.

The adoption of this controversial protocol has been slow since its upgrade is not mandatory. Owing significantly to the SegWit protocol, the transaction rates of Bitcoin have been optimistic even as the transaction fees have declined. Major crypto asset exchange platforms have also backed SegWit facilitating its adoption for network players.

The protocol increases the block size from 1 MB to over 3 MB simply by eliminating digital signatures from the input. These signatures take up a significant volume, 65% in a transaction. Detaching these frees up space for more transactions to be added in a block. Subsequently, more transactions are carried out by fewer blocks on the chain efficiently.

SegWit was initially developed to fix a security flaw concerning transaction malleability on the Bitcoin network. Since the transactional signatures are removed from the input, no fraudulent entity on the network would be able to alter the Transaction ID.

A Twitter user @PESligo commented:

“For me Segwit was not about block size, it was about more efficient code reducing TX fees and more important introducing the technology to allow L2 and many other technologies to Bitcoin. Until a few more Dev’s add their voice I see no need for all this noise.”

The nodes without SegWit implementation can seamlessly execute transactions with the upgraded nodes. Hence, the technology has not been widely embraced. Despite its activation in 2017, the protocol largely remains untouched by most of the network players, both big and small.

Besides, miners are at a loss. The elimination of digital signatures decreases the mining reward. Even when the pros seem to outweigh the cons, SegWit will continue to face serious opposition from major mining players.

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