Major Crypto Exchange Announces Deposit Support for Bitcoin Scaling Update SegWit

Rick Delafont

Last Updated: October 7, 2020 11:26 am

2 mins read

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Bitfinex has just announced a new update that will help support the Bitcoin network. The crypto exchange platform will allow users to deposit using bech32 (SegWit) addresses.

SegWit is a method to effectively increase the capacity of the Bitcoin blockchain. It was introduced to the network via a soft fork in August 2017.

SegWit Support Still Not Universal Across Bitcoin Exchanges!

Despite being some of the biggest transactors of Bitcoin and cryptocurrency, exchange platforms have been remarkably slow at supporting the SegWit upgrade. However, as per an announcement posted to its blog, Bitfinex has just introduced bech32 address generation.

This means that users will be able to make deposits in the SegWit format and, therefore, their transactions will not place unnecessary burden on the blockchain.

SegWit transactions do not need to store as much data to the blockchain and widespread use of the update effectively raises the size of each block, without having to actually increase their capacity. Some developers argue that increasing the block size itself, as those who support Bitcoin Cash and Bitcoin SV are in favour of doing, poses greater risk of miner centralisation and that Bitcoin’s security model is more important than its utility as a means of making small payments.

The Bitfinex announcement follows another recent upgrade at the exchange. At the end of last month, it added support for withdrawals to bech32 addresses. Now, with the addition of deposits, users of the Bitfinex platform will be able to benefit from the SegWit upgrade when both sending to and receiving from Bitfinex.

Even though Bitfinex and many other leading exchanges now support SegWit deposits and withdrawals, the same cannot be said about every trading venue. Despite the update being well over two years old at this point, the likes of Binance are still dragging its feet.

ok hear me out @cz_binance, if you add full segwit support (segwit deposits, and withdrawals to bech32) + allow generating new deposit addresses (to avoid address reuse), i will change my profile pic to @binance logo for the rest of 2019

— Udi Wertheimer (@udiWertheimer) October 2, 2019

This prompted developer and Bitcoin proponent Udi Wertheimer to offer Changpeng Zhao, the CEO of Binance, a rather unusual deal last month. He said that if Binance introduces full SegWit support, he would change his profile picture to one advertising Zhao’s exchange. The Binance executive responded and after some back-and-forth, the two came to an agreement. Binance says that it too will introduce SegWit support before the end of 2019 and when it does, Wertheimer will advertise the Binance brand via his personal Twitter account for the rest of the year. The developer also offered to help Zhao with the implementation if necessary.

Featured Image from Shutterstock.

Rick Delafont

Based in Europe, Rick has written about the cryptocurrency industry since 2016. He was first drawn to Bitcoin as a means of payment but quickly became fascinated by its wider potential implications. His interests lie in the political, economic, and social impact of the unfolding digital asset revolution.