First peer to peer Cryptocurrency exchange to activate full SegWit Bitcoin addresses [Bech32]
Liberalcoins.com is the first peer to peer (p2p) exchange to successfully implement full SegWit Bitcoin addresses [Bech32] into their exchange. This allows users and traders of Bitcoin to be able to benefit from significantly lower transaction fees and increased transaction speed. Furthermore, there is the added benefit of removing security threats like transaction malleability, which drastically increases security on the network.
Bitcoin has been on a rollercoaster ride in recent months, hitting heights close to $20,000 followed by drops to as low as $6,200. The dramatic rise in mainstream appeal and demand for the famous cryptocurrency has also led to scaling problems as the network has not been able to grow its capacity relative to its exponential growth. This has led to Bitcoin fees and transfer times skyrocketing while rendering Bitcoin economically impractical for smaller and micro transactions.
One of the popular solutions to address the growing pains of the Bitcoin network is SegWit (Segregated Witness), brought forward in 2015 by BlockkStream’s Dr. Pieter Wuille. SegWit effectively allows for more transactions to fit into a block by stripping out signature data from transactions and adding them to an extended block. This introduces a new concept called “block weight” which is capped at 4MB and includes the segregated witness data, while the block size limit for base transactions remains at 1 MB. Maintaining the original 1MB block size limit also means that the SegWit upgrade is compatible with the previous Bitcoin protocol and did not require a hard fork. Another great benefit of the SegWit activation is that it supports the development of 2nd layer protocols such as the lightning network (which will further increase Bitcoin’s transaction capacity) amongst many other developments.
There are various pros and cons to SegWit including the following:
Pros :
* Raises the number of transactions that can be included in a block
* Lowers transaction fees
* Prioritises SegWit transactions versus “regular” transactions resulting in shorter waiting times
* Confirms transactions faster resulting in shorter waiting times
* Assists in the scalability of Bitcoin
* Potentially increases overall fees that miners can collect as the number of transactions in each block will increase
* Eliminates transaction malleability
* Aids in the activation of lightning protocol
* Removes the quadratic hashing problem, where in certain transactions, signature hashing scales quadratically (quadratic hashing is an issue that comes along with block size increase)
Cons:
* Generates less transaction fees for miners per each individual transaction
* Increases significantly the usage of resources since the capacity, transactions and bandwidth will increase
* Additional maintenance of the side-chain, which requires additional maintainence by miners. However, maintenance of the side-chain does not have any established financial benefits yet
Liberalcoins is the first p2p exchange to successfully implement SegWit Bech32 addresses, enabling users to benefit from the increased transaction speed, lower fees and increased security. CEO Simon Lange says “We want our users to benefit from the latest upgrades and we want to do our part to move the cryptocurrency industry forward”.
Traditional exchanges have so far mostly implemented Segwit P2SH wrapped addresses. The limitation with these addresses is that while they enable SegWit, they do not take full advantage of its capacity. Transactions are still larger than required. Bech32 addresses are “full” SegWit addresses, which reduce the size of a transaction 10% further, compared to P2SH wrapped addresses. Recent tests also revealed that transactions to SegWit Bech32 addresses can be as low as US $ 0.01 (1 cent) depending on transaction size.
In order to use SegWit Bech32 addresses on Liberalcoins, users follow a simple process of creating a new Bitcoin address in their Liberalcoins wallet. For users that are not able to deposit funds on a Bech32 address, we have also implemented P2SH SegWit addresses.
Sign up to buy and sell Bitcoin on Liberalcoins.com now to be part of one of the fastest growing, secure peer 2 peer exchanges on the market!
