Day 9: I will post this guide regularly until available solutions like SegWit, order batching, and Lightning payment channels are mass adopted, the mempool is empty once again, and tx fees are low. Have you done your part?
BACKGROUND
Segregated Witness (SegWit) was activated on the Bitcoin network August 24 2017 as a soft fork that is backward compatible with previous bitcoin transactions (Understanding Segregated Witness). Since that time wallets and exchanges have been slow to deploy SegWit, and the majority of users have not made the switch themselves.
On Dec 18 2017 Subhan Nadeem has pointed out that: If every transaction in the Bitcoin network was a SegWit transaction today, blocks would contain up to 8,000 transactions, and the 138,000 unconfirmed transaction backlog would disappear instantly. Transaction fees would be almost non-existent once again.
Mass SegWit use alone could empty the mempool, result in blocks that are not completely full, and make it possible to include transactions with $0 fee once again.
On Jan 11 2018 when BTC sends went offline at Coinbase the mempool began to rapidly empty. Later in the day when service was restored there was a sharp spike up in the mempool. Subsequently, that afternoon Brian Armstrong finally had to break his silence on the topic and admitted Coinbase is working on SegWit but has still not deployed it. It appears that this is an important data point that indicates if just a few major exchanges would deploy SegWit the high fees bitcoin is experiencing would be eliminated.
SegWit is just one technique available to exchanges and users to reduce pressure on the Bitcoin network. You can make the switch to SegWit on your next transaction, and pressure exchanges to deploy SegWit NOW along with other actions that will reduce their transaction impact on the network. You can help by taking one or more of the action steps below.
ACTION STEPS
- If your favorite wallet has not yet implemented SegWit, kindly ask them to do so immediately. If your wallet is not committed to implementing SegWit fast, speak out online any way you can and turn up the pressure. In the meantime start using a wallet that has already implemented SegWit.
- If your favorite exchange has not yet implemented SegWit, try to avoid making any further purchases of bitcoin at that exchange and politely inform them that if they do not enable SegWit within 30-days they will lose your business. Sign-up for an account at a SegWit deployed/ready exchange now and initiate the verification process so you'll be ready to bail
- Help educate newcomers to bitcoin about the transaction issue, steer them towards SegWit wallets from day one, and encourage them to avoid ever purchasing bitcoin through non-SegWit ready exchanges that are harming bitcoin.
- Spread the word! Contact individuals, websites, etc that use bitcoin, explain the benefits of SegWit to everyone, and request they make the switch. Use social media to point out the benefits of SegWit adoption.
IMPORTANT NOTE: The mempool is currently still quite backlogged. If you are a long-term holder and really have no reason to move your bitcoins at this time, wait until the mempool starts to clear and transaction fees go down before moving your bitcoins to a SegWit address or SegWit friendly exchange.
BEYOND SEGWIT - BATCHING, PAYMENT CHANNELS, LIGHTNING
Batching is another great way that exchanges can reduce their fees. See: Saving up to 80% on Bitcoin transaction fees by batching payments. Despite the benefits of batching, some exchanges have been slow to implement it. Users should demand this or walk.
Beyond SegWit & Batching, Lightning Network integration will have even more effect. Lightning is now active and exchanges could setup payment channels between each other so that on-chain transactions need not take place. Some ideas have to outline how that might work are here: Google Doc - Lightning Exchanges. Which two bitcoin exchanges will be the first to establish a lightning channel between themselves and offer free/instant transfers between them for their customers? This will happen in 2018
MEMPOOL/SEGWIT STATISTICS
- BitInfoCharts.com - Average Transaction Fees - $23USD per Tx
- BitcoinFees.info - Next Block Fee - $14USD
- Blockchain.info - Unconfirmed Transactions - 131K unconfirmed Tx's
- SegWit Charts - 11% SegWit Tx's
- Johoe's Bitcoin Mempool Statistics
NEWS/DEVELOPMENTS/VICTORIES
- Merged pull requests on SegWit. GUI support for SegWit in Core Wallet should happen on/before May 1 with the release of 0.16.0
- Petition to Coinbase to Prioritize SegWit implementation on the Coinbase Bitcoin Wallet & GDAX Exchange passes 10,000
SELECTED TOP EXCHANGES BY BATCHING & SEGWIT STATUS
| Exchange | Segwit Status | Batching Status |
|---|---|---|
| Binance | NOT READY | Yes |
| Bitfinex | Ready | Yes |
| Bitonic | Ready | Yes |
| Bitstamp | Deployed | Yes |
| Bittrex | ? | Yes |
| Coinbase/GDAX | NOT READY | No |
| Gemini | Ready | No |
| HitBTC | Deployed | Yes |
| Huboi | ? | ? |
| Kraken | Deployed | Yes |
| LocalBitcoins | Deployed | Yes |
| OKEx | ? | ? |
| Poloniex | ? | Yes |
| QuadrigaCX | Deployed | Yes |
| Shapeshift | Deployed | No |
Note: all exchanges that have deployed SegWit are currently only sending to p2sh SegWit addresses for now. No exchange will send to a bech32 address like the ones that Electrum generates
Official statements from exchanges:
- Bitonic: SegWit: In testing (including send from bech32). Batching: Have been for years.
- Coinbase: working on batching transactions, SegWit, and a number of other strategies to improve transaction backlog. Thx for bearing with us!
- Kraken: Deposits are made to Segwit addresses and withdrawals are sent in Segwit format, but frontend presentation is pending full implementation/support in wallets such as bitcoin core.
- Shapeshift: We don't order batch, but we will get to it. So much engineering to do :/
SELECTED WALLETS THAT HAVE SEGWIT ALREADY
Make sure you have a SegWit capable wallet installed and ready to use for your next bitcoin transaction
| SegWit Enabled Wallets | Wallet Type |
|---|---|
| Ledger Nano S | Hardware |
| Trezor | Hardware |
| Electrum | Desktop |
| Armory | Desktop |
| Edge | iOS |
| GreenAddress | iOS |
| BitWallet | iOS |
| Samourai | Android |
| GreenBits | Android |
| Electrum | Android |
| SegWitAddress.org | Paper |
FAQs
If I'm a HODLer, will it help to send my BTC to a SegWit address now?
No, just get ready now so that your NEXT transaction will be to a SegWit wallet. Avoid burdening the network with any unnecessary transactions for now.
Why is SegWit adoption going so slowly? Is it a time-consuming process, is there risk involved, is it laziness, or something else?
SegWit will require some extra work to be done right and securely. Also, most exchanges let the user pay the fee, and up to now users have not been overly concerned about fees so for some exchanges it hasn't been a priority.
Once Segwit is FULLY adopted, what do we see the fees/transaction times going to?
Times stay the same - fees will go down. How much and for how long depends on what the demand for transactions will be at that time.
What determines bitcoin transaction fees, to begin with?
Fees are charged per byte of data and are bid up by users. Miners will typically include the transaction with the highest fee/byte first.
Can you please tell me how to move my bitcoins to SegWit address in Bitcoin core wallet? Does the sender or receiver matter?
The Bitcoin core wallet does not yet have a GUI for its SegWit functionality. Download the latest version of Electrum to generate a SegWit address.
A transaction between two SegWit addresses is a SegWit transaction.
A transaction sent from a SegWit address to a non-SegWit address is a SegWit transaction.
A transaction sent from a non-SegWit address to a SegWit address is NOT a SegWit transaction. You can send a SegWit Tx if the sending address is a SegWit address.
What wallet are you using to "batch your sends"? And how can I do that?
Using Electrum, the "Tools" menu option: "Pay to many".
Just enter your receive addresses and the amounts for each, and you can send multiple transactions for nearly the price of one.
Why doesn't the Core Wallet yet support SegWit?
The Core Wallet supports SegWit, but its GUI doesn't. The next update will likely have GUI support built-in
Why isn't a large exchange like Coinbase SegWit ready & deployed when much smaller exchanges already are? Why do they default to high fees? Where is the leadership there?
Draw your own conclusions based on their own words:
March 2016 - Coinbase CEO Brian Armstrong has reservations about Core
P2SH/bech32 FAQs
What are the two SegWit address formats and why do they exist?
It's been a challenge for wallet developers to implement SegWit in a way that users can easily and without too much disruption migrate from legacy to SegWit addresses. The first wallets to enable SegWit addresses – Ledger, Trezor, Core, GreenAddress – use so-called “nested P2SH addresses.” This means they take the existing Pay 2 Script Hash address – starting with a “3” – and put a SegWit address into it. This enables a high grade of compatibility to exist wallets as every wallet is familiar with these addresses, but it is a workaround which results in SegWit transactions needing around 10 percent more space than they otherwise would.
Electrum 3.0 was the first wallet to use bech32 addresses instead of nested p2sh addresses.
What is the difference in address format between SegWit address formats P2SH and bech32?
P2SH starts with "3..."
bech32 starts with "bc1..."
Which addresses can I send from/to?
P2SH Segwit addresses can be sent to using older Bitcoin software with no Segwit support. This supports backward compatibility
bech32 can only be sent to from newer Bitcoin software that support bech32. Ex: Electrum
Why did ThePirateBay put up two Bitcoin donation addresses on their frontpage, one bech32 and one not?
The address starting with a "3..." is a P2SH SegWit address that can be sent BTC from any bitcoin address including a legacy address. The address starting with a "bc1..." is a bech32 SegWit address that can only be sent to from newer wallets that support bech32.
SEGWIT BLOG GUIDES
- HowToToken.com - How To Send Bitcoin Faster And Cheaper Over SegWit Transactions
- BTCManager.com - Electrum 3.0 is first Wallet to enable Bech32 SegWit Addresses
PREVIOUS DAY'S THREADS
There's lots of excellent info in the comments of the previous threads:
- Day 1: If every Bitcoin tx was a SegWit tx today, we'd have 8,000 tx blocks & the tx backlog would disappear. Tx fees would be almost non-existent once again. THE NEXT BITCOIN TX YOU MAKE, MAKE IT A SegWit TX. DOWNLOAD A SegWit COMPATIBLE WALLET AND OPEN A SegWit COMPATIBLE EXCHANGE ACCOUNT RIGHT NOW
- Day 2: I will repost this guide daily until available solutions like Segwit & order batching are adopted, the mempool is empty once again, and transaction fees are low. You can help. Take action today
- Day 3: ARE YOU PART OF THE SOLUTION? News: Unconfirmed TX's @ 274K, more exchanges adding SegWit, Core prioritizes SegWit GUI
- Day 4: Unconfirmed TX's @ 174K
- Day 5: I will post this guide regularly until available solutions like SegWit & order batching are mass adopted, the mempool is empty once again, and transaction fees are low. User demand from this community can help lead to some big changes. Have you joined the /r/Bitcoin SegWit effort?
- Day 6: I will post this guide regularly until available solutions like SegWit & order batching are mass adopted, the mempool is empty once again, and tx fees are low. Refer a friend to SegWit today. There's no $10 referral offer, but you'll both get lower fees and help strengthen the BTC protocol
- Day 7: I will post this guide regularly until available solutions like SegWit & order batching are mass adopted, the mempool is empty once again, and tx fees are low. Do you want low tx fees, because this is how you get low tx fees
- Day 8: I will post this guide regularly until available solutions like SegWit, order batching, and Lightning payment channels are mass adopted, the mempool is empty once again, and tx fees are low. BTC Core SegWit GUI coming May 1, Coinbase incompetence exposed, more exchanges deploy SegWit
Submitted January 20, 2018 at 09:24PM by Bastiat http://ift.tt/2Dw9G0R
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