Binance Adds Support for SegWit Deposits
Cryptocurrency exchange Binance has added support for Segregated Witness (SegWit) deposits, three and a half years after SegWit was activated on the Bitcoin network. The firm announced their integration in a blog post on Wednesday.
SegWit is Bitcoin's possibly largest protocol upgrade to date, as it has introduced a number of improvements to Bitcoin's performance. The proposal originally sought to fix an anomaly in the Bitcoin protocol that, while mostly harmless to the network itself, prevented the straightforward deployment of second layer solutions such as the Lightning Network.
SegWit further enabled fee savings for users by increasing Bitcoin’s theoretical block size to four megabytes (although more realistically to around two megabytes) and introduced “script versioning,” a protocol extension that paved the way for the integration of further scaling and privacy solutions such as Schnorr Signatures and Taproot.
Binance's integration comes in the form of an added deposit option, allowing Bitcoin users to select SegWit addresses (commonly called bech32 addresses) when sending funds to the exchange.
A SegWit integration had been long-requested by the Bitcoin community, as Binance services a large number of customers that were previously limited to using the exchange with legacy addresses.
While it is unclear why Binance opted to integrate SegWit later than other exchanges, for some industry participants, it has to do with the technical effort needed to implement the upgrade, which requires more time and overhead for large companies and may not be every firm’s top priority.
Prior to Binance adding SegWit support, exchanges such as Bitfinex, BitMEX, Gemini, and Bitstamp had integrated the upgrade. Other service providers such as Blockchain.com have not yet added support for SegWit.
Binance's SegWit integration may eventually be reflected in SegWit's overall adoption that currently sits at around 46 percent, meaning just under half of all transactions on the Bitcoin network use SegWit.