Jameson Lopp, a prominent bitcoin developer and lead engineer at BitGo, revealed that some of the largest customers using bitcoin and blockchain security services of BitGo are saving as much as $100,000 on a monthly basis in transaction fees due to SegWit.
Our largest customers who have upgraded to SegWit are saving nearly $100,000 a month in transaction fees.
— Jameson Lopp (@lopp) November 9, 2017
Does SegWit Actually Decrease Transaction Fees?
By reducing the size of bitcoin transactions, SegWit decreases fees by at least 35 percent, as major bitcoin hardware wallet manufacturer Ledger revealed.
“When computing a Segwit signature, the previous transactions do not need to be processed by the device, and each input is only processed once during the signature process, leading up to a 60% time optimization in the signature process. Segwit introduces the concept of block weight which changes the way the transaction size is computed by splitting the signatures in a different area — you can typically save 35% of the fee paid when sending a transaction immediately,” explained the Ledger development team.
Bitcoin users depending on SegWit-enabled platforms such as Ledger, Trezor, and ShapeShift likely have experienced substantial decrease transaction fees and overall optimization of the bitcoin blockchain over the past few weeks. Most recently, ShapeShift became one of the leading bitcoin service providers and exchanges to integrate SegWit, which has had a major impact on the adoption of SegWit as ShapeShift processes around three percent of the bitcoin network’s transactions.
Transaction fees of bitcoin are still high because the adoption of SegWit has been stalled by major bitcoin and cryptocurrency businesses that have not integrated SegWit upon its release. Unlike Ledger and Trezor, some of the most widely utilized bitcoin wallet and trading platforms such as Blockchain and Coinbase have not implemented SegWit.
Blockchain CEO Peter Smith Does Not See Scaling in SegWit
Earlier this week, Peter Smith, the CEO at Blockchain, the most popular bitcoin wallet platform in the bitcoin industry, criticized the “centralization of bitcoin” and expressed his unenthusiastic stance towards SegWit.
Smith stated:
“Trend over last few years in bitcoin is increasing centralization. More coins within fewer entities / systems, fewer mining hw manufactures & pool ops, fewer Core devs with decision making agency. Sadly, likely trend will accelerate partly due to high fees and other system pressures.”
In a response to Alan Silbert’s inquiry on Blockchain’s process of integrating SegWit, Smith added, “Where are these lower fees? BitGo has SegWit. BitGo customers still paying higher fees than pre-SegWit.”
However, the statement of Smith was immediately refuted by BitGo lead engineer Lopp, who emphasized that the company’s customers have been saving $100,000 per month with BitGo’s SegWit-enabled bitcoin transaction processing platform.
Evidently, in the upcoming months, as the bitcoin price increases exponentially and the user base of bitcoin rises at an unprecedented rate, on-chain scaling will be necessary to further decrease bitcoin transaction fees. But, since SegWit was activated as a scaling solution, the industry should at least attempt to see SegWit through by integrating it and optimizing the bitcoin blockchain.