If you follow Bitcoin news, you’ll have seen that SegWit was “locked in” a few weeks ago and is now waiting for activation. SegWit doesn’t have an exact time when it’ll be activated but estimates say the activation will take place on Thursday. SegWit will bring many benefits to the Bitcoin network, but more importantly, lays the ground work for the Lightning Network (LN) which will bring faster and cheaper transactions, and better scalability.
The introduction of SegWit and LN, it’s hoped, will rectify the cost of transactions on the Bitcoin network; according to the latest charts, the average transaction is costing users $5, not exactly cheap as was promised by many advocates of the cryptocurrency.
According to Trezor, the hardware wallet maker, Segwit includes the following benefits:
- Signed transaction value in input – No need for length input verifications via previous transactions and their hashes.
- Linearly increasing validation times – Gone is the quadratically increasing waiting time for transaction signing.
- Script versioning – Future new features will be easier to implement and support in wallets like TREZOR.
- Segregated signatures – Slimming down the transaction size, thereby effectively increasing the number of transactions that will fit into a block.
- Malleability fix – Increases security for advanced Bitcoin services, enabling second layer applications like Lightning Network or smart contracts.
Once SegWit is active and work begins on implementing LN, we might see a drastic decrease in the amount charged for transaction fees. According to the LN website, LN is “capable of millions to billion of transactions per second across the network … By transacting and settling off-blockchain, the Lightning Network allows for exceptionally low fees.” By comparison, Visa can handle a peak of 56,000 transactions per second as of 2015.
SegWit and LN have caused a bit of a stir in Bitcoin communities online, how do readers feel about them being implemented, do you think they will bring the transaction fees down?