Bitcoin fees and scalability problems were all the talk just a few months ago, but since then, major moves were made towards making sure that these problems do not arise in the future. Transaction fees are now over 95% lower than the levels seen in late December 2017.
Over the recent months, immense moves have been made towards reducing Bitcoin fees while making the cryptocurrency more efficient and accessible to larger parts of the public. These moves have culminated in the SegWit protocol and the eagerly awaited Lightning Network.
To those who do not know, the SegWit protocol is a protocol built on the Bitcoin network that helps to reduce the size of transactions on the blockchain by removing signature data. This important protocol helps to greatly reduce transaction fees on the network while still allowing for each Bitcoin block to accept more transactions.
SegWit use on the Bitcoin network currently accounts for over 30% of all the transactions made on the cryptocurrency’s blockchain. Although this number may seem substantial, SegWit adoption growth has remained stagnant over the recent weeks.
Last month, cryptocurrency exchanges, such as Coinbase, Bitfenix, and Gemini, announced their support for SegWit. This move of SegWit adoption by large market makers really helped bring the protocol to a greater awareness by the crypto community.
But since then, the use of SegWit with other large Bitcoin service providers has been rather minimal.
Additionally, there still has yet to be a good way in which consumers can use SegWit on an average basis. Many mobile wallets and online wallets, which more common Bitcoin users may utilize, still do not have options to be used in conjunction with SegWit. This has been one of the main factors that have led to this stagnation in the use of this protocol on the network.
Despite all this, SegWit has still seemed to have been a topic of discussion for many of the Bitcoin “whales.” The highest value Bitcoin wallet, with a staggering amount of just over 175,000 Bitcoins, is actually a SegWit-supported address. In fact, 26 out of the top 100 Bitcoin wallets use SegWit as a means of transporting their Bitcoin.
Watch out SegWit! Bitcoin’s Lightning Network Is Here
Along with the SegWit protocol, the Lightning Network (LN) hopes to make the Bitcoin blockchain more efficient.
The Lightning Network hopes to allow for instant transactions with extremely low transaction fees while still scaling the network to thousands of transactions per second (TPS). In an attempt to prove that the prototypes of this scaling solution works, people have begun tipping other Lightning Network users a Satoshi, the smallest unit of Bitcoin.
— Vortex (@theonevortex) April 9, 2018
Until recently, conducting transactions on the Lightning Network has been far from user-friendly. Just last week, there were announcements about the official Lightning Network wallet being released on the Google Play Store.
The Eclair wallet, awaited by many for months, finally arrived for public consumption. It was an instant success, with the announcement blowing up on social media platforms. Sadly, the team running the Eclair wallet had to take down the app in light of some glitches and anomalies being found while running the app on the Bitcoin mainnet. However, the team at ACINQ, the company behind Eclair, reassured the community as they announced their plans to re-release the wallet within the upcoming days.
PSA: We have disabled the mainnet Eclair Wallet Android app from Google Play and removed the apk link from our github page.
— ACINQ (@acinq_co) April 7, 2018
Despite this minor setback, this wallet, along with other projects built with the Lightning Network, will only continue to push the Bitcoin network to become more widely accessible and efficient for old and new users alike. The appeal of microtransactions, which was an important catalyst during the baby stages of the cryptocurrency, may finally return to the Bitcoin network with fees becoming so nominal.
So How Do Bitcoin Fees Fare?
As of April 2018, the average Bitcoin transaction fee is over 95% less than the fees seen during the cryptocurrency rush of late 2017. According to BitInfo, the average transaction fee is hovering at just around $1 USD, which is an obvious far cry from the days of over $50 transaction fees, seen when SegWit and the LN were not as integrated as they are now.
Although this decrease in transaction fee cost has not been fully attributed to SegWit and the apparent arrival of the LN, it would be foolish to say that they did not play some role in the fee decrease.
It is great to see that the cryptocurrency community has been making moves towards allowing for higher levels of adoption and efficiency. Gone are the days of $50 transaction fees and slow transaction times, as we can now eagerly await the arrival of the fully fledged Lightning Network supported by vendors, exchanges, and consumers alike.
What do you think of projects like SegWit and the Lightning Network? How do you think they will affect how Bitcoin is used? Please let us know in the comments.
Images courtesy of Bitcoinist archives, Pixabay, Twitter/@acinq_co, and Twitter/@theonevortex.