Binance Enables SegWit Support for Bitcoin Deposits

One of the world’s largest cryptocurrency exchanges, Binance, recently started supporting SegWit (bech32) addresses for Bitcoin deposits after the adoption of the addresses started to increase.

SegWit for Bitcoin

The exchange started supporting Segregated Witness (SegWit) addresses on its platform on Christmas Eve. The firm had initially provided SegWit support only for withdrawals. Users can now transfer funds to a SegWit (bech 32) address as soon as they select the BTC (SegWit) option on the network. The platform commented,

“Please note SegWit should help reduce fees; however if you incorrectly send incompatible assets to the address, your funds will not be recoverable and will result in permanent loss.”

SegWit is a Bitcoin protocol upgrade implemented in 2017 that is designed to scale the network and fix bugs associated with the expanding network. SegWit works by segregating signatures from transaction data and updates it differently on the blockchain. This upgrade will help in storing more transactions in one block and will eventually help in increasing transaction capacity.

SegWit is growing bigger

Data collected from transactionfee.info suggests that 2/4rd of the Bitcoin payments are already using SegWit. This means that the adoption of the protocol is high on the network. Bitcoin’s use-case as a store of digital value is growing in recent times. There are several limits to scalability on the network which has created several hurdles in the adoption of the cryptocurrency.

A popular scaling solution for Bitcoin is the Lightning Network (LN). This layer 2 solutions have helped in building Bitcoin’s use case as a payment protocol, not just as digital gold. The soft fork update to Bitcoin which came via SegWit is much different from the Lightning Network. LN creates an additional layer on the network which enables cheaper and faster transactions.

However, despite all the scalability issues, Bitcoin continues to be the leader in the cryptocurrency market. The coin recently touched new all-time highs and is the most commonly used currency on crypto exchanges as well as crypto ATMs. According to CoinMarketCap, Bitcoin’s dominance in the market, around Christmas 2020, is 68.7%.