August 25, 2017
The question of Bitcoin scaling is finally settled: On August 24 SegWit was activated! This is a major technical milestone, and a cause for celebration in the bitcoin community. Developers now have the ability to use the new protocol, which is expected to improve transaction speed and security – and lower fees.
To give you a sense of just how big this is, it prompted Max Keiser, of Keiser Report fame, to double his Bitcoin price forecast from $5000 to $10,000. Wow.
As of this writing, there has been little market reaction. Pricing has remained surprisingly stable, in fact, with no “buy” or “sell” news breaking. Stability is a good thing right now, as it signals market maturity. It’s possible that the market isn’t quite ready to react, and things could change at any moment. We believe the non-reaction supports a bullish point of view, however. In any case, we will be keeping an eye on things. And of course, you can check the Bitcoin price anytime using the calculator on our home page.
The bitcoin experience in the post-SegWit world
The first improvement is that bitcoin blocks will be greatly optimized. This is a benefit of SegWit coding, which replaces a large piece of data that used to be kept within each transaction. The size of transactions will shrink, and in turn, bitcoin block sizes are expected to decrease by 75%. This will allow more transactions to fit on a block – 30% more, actually. In a sense the blocks will become more aerodynamic. This is a key component to Bitcoin scaling.
What does it all mean for you? Several things: Payment processing will be more streamlined, so transaction speeds will increase. If you have experienced delays in transaction processing – which is what started the whole scalability debate – the problem should be solved. And, even better, lighter loads on the blocks means that fees will go down.
SegWit brings a security upgrade as well, which is also related to speed. Bitcoin wallets will have fewer operations to run through in the course of a transaction. Both the pre-confirmation and verification processes will be quicker. Basically anything that cuts transaction times increases security, as any would-be attackers have much less opportunity to cause trouble.
Enjoy the new and improved Bitcoin!