Bitcoin exchanges add tech to make transactions 20% cheaper

  • Coinbase and Bitfinex, the two largest exchanges by U.S. dollar-bitcoin trading volume, are adopting a software called SegWit.
  • The move should lower transaction fees by up to 20 percent, and speed up trading across the network, Bitfinex says.
  • High transaction fees were a key reason for the “fork” from bitcoin into bitcoin cash.

Two of the biggest cryptocurrency exchanges are aiming to make bitcoin transactions faster and cheaper with a new software update announced this week.

Both Coinbase and Bitfinex said they are adopting a software called SegWit, which bitcoin bulls and one exchange say should lower fees by as much as 20 percent while speeding up transactions.

“The most noticeable changes in the short term should be more efficiency when transacting,” said Alex Sunnarborg, founding partner at crypto hedge fund Tetras Capital. “SegWit adoption is undoubtedly positive for bitcoin as it greatly impacts transaction fees, speed, and future tech possibilities, all areas in which alternative crypto assets like Bitcoin Cash and Ethereum compete with and often criticize bitcoin on.”

Bitcoin enthusiasts have split over the best way to improve the cryptocurrency network’s efficiency. An upgrade called SegWit2x was called off in the fall after it lost widespread support.

Meanwhile, bitcoin transaction fees soared well above $20 in the last few months and confirmation times could take longer than a day. Some users were so frustrated with fees, and unable to compromise on blockchain size increases, that they “forked” bitcoin, and created bitcoin cash this summer.

The Coinbase cryptocurrency exchange application seen on the screen of an iPhone.

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