Cryptocurrency Payment Processor BitPay Finally Announces Support for SegWit
Bitpay, the crypto payment processing giant, has finally integrated the segregated witness (SegWit) protocol, a second layer scalable solution to make bitcoin processing cheaper. The Segwit integration is currently optional for bitcoin wallet users on BitPay. However, the firm plans to make it a default feature by the year-end.
SegWit was first proposed by Pieter Wuille, a bitcoin core developer in 2015. The SegWit protocol aimed to free up block space on Bitcoin blockchain without increasing the block size.
SegWit also eliminated a transaction signature vulnerability, which allowed miscreants to manipulate transaction signatures. On the other hand, BitPay is one of the largest crypto processors and currently processes around $1 billion worth of crypto transactions every year.
BitPay had earlier passed on an opportunity to integrate SegWit on its platform almost three years back and instead opted for another protocol called SegWit2x. SegWit2x implemented segWit itself, but at the same time, it also increased the block size from 1MB to 2 MB.
The Bitcoin community was divided over the use of the two protocols, creating conflict in the community over the size of the Bitcoin block, and many believe this also led to the creation of Bitcoin Cash Network.
However, SegWit2x failed to capture on the industry support, and as of today, 63% of all bitcoin transactions are processed using SegWit.
BitPay’s Decision Surprises Many
BitPay’s staunch support for an alternative second-layer protocol over SegWit has made many wonder what changed the minds of its decision-makers.
Sean Rolland, BitPay director of the product, claimed that now is the perfect time to introduce SegWit to its users as it decreases the cost of transactions by up to 30%, and the firm believes it would reduce the fee by 5%-10% with a new update.
Bitcoin was created to provide an alternate easy to use financial tool which offered lightning-fast transaction speeds at minimal transaction cost.
However, as bitcoin’s popularity grew, the network started to show signs of fatigue as it was unable to handle the transaction volume, making it slow, complicated, and costly to use. This was when developers came up with an off-chain second layer solution in the form of the Lightning Network and SegWit.
The lightning network showed a lot of promise. Still, even after years into development, the LN protocol seems to have more complexities than it was invented to resolve. Thus, SegWit became a popular choice.