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SegWit has come a long way since its first appearance during the 2015-2017 blocksize war. However, despite its relative success as a Bitcoin (
$73,551.00 ) upgrade, crypto exchanges including Binance and Gemini are still not committed to using SegWit addresses for sending Bitcoin ( $73,551.00 ) (BTC).
Implemented in 2017, segregated witness (SegWit) is a soft fork upgrade that separates “witness” data from the base transaction. In an “explain like I’m five” kind of way, SegWit allows for a safer and faster Bitcoin ( $73,551.00 ) , making scaling the network easier.
While most exchanges and individuals were quick to upgrade their infrastructure to take on SegWit, reaching the 50% mark for Bitcoin ( $73,551.00 ) transactions in 2019, the largest exchange, Binance has been dragging its feet.
Glassnode’s report states that Binance “had trivial SegWit adoption rates of only 10% up until the end of 2021.” However, it has finally “made an earnest effort to push SegWit adoption near the end of 2021.” Its adoption rate is currently at 50%, paling in comparison to Coinbase and FTX at 100%.
Altogether, crypto exchanges consume roughly 40% of Bitcoin ( $73,551.00 ) block space. Crucially, however, Coinbase and Binance make up the lion’s share of block space, responsible for “25% of consumed block space” last month. If leaders such as Binance, or large players such as Gemini fail to fully adopt SegWit, Bitcoin ( $73,551.00 ) will struggle to reach its true scaling potential.
Tomer Strolight, editor in chief at Swan Bitcoin ( $73,551.00 ) , illustrates the argument:
“The fee savings provided by SegWit (and also batching and Taproot) will inevitably lead to their near-universal use. These have succeeded already in vastly reducing congestion and lowering fees. Ironically, however, their success to date means that we may have to wait until fees become a problem again to give the late adopters the kick in pants they need to fully switch.”
Glassnode’s report also shares a more accurate measure for reading SegWit adoption, SegWit utilization. When applied to single entities, such as exchanges, it provides a more detailed picture.
Of the 18 major exchanges that Glassnode investigated, one-third are bona fide SegWit supporters at over 90% adoption levels. The second third–including Binance–are taking their best shot at adopting SegWit ranging from 50% to 80%, while the final six are still using Bitcoin ( $73,551.00 ) addresses beginning with the number 1, rather than SegWit’s 3.
Related: 88% of all BTC transfers are overpaying transaction fees
Here is the graph detailing the exchange SegWit ranking:
It’s unlikely that the laggard exchanges will upgrade to Taproot, the most recent Bitcoin ( $73,551.00 ) soft fork, any time soon. As Strolight points out, we might have to wait until fees rise before they wake up.
