Bitfinex is one of the world’s leading cryptocurrency exchanges and has rolled out an update that helps support its Bitcoin network. The platform has finally gone around to allowing deposits made via Bech32 (Or Segwit) addresses.
SegWit, standing for Segregated Witness, was introduced into the Bitcoin blockchain through a soft fork back in August of 2017. The idea was to solve the scaling issue Bitcoin was suffering at the time by implementing this new piece of software. It, in turn, caused several hard forks in the Bitcoin network as various groups disagreed with each other about what’s the best way to handle something like this.
SegWit is considered part of Bitcoin and is one of the biggest transactors when it comes to Bitcoin and other cryptocurrencies making use of the technology. It’s mainly used to decrease transaction times and optimizing blockchain resource management. Luckily, exchanges are catching on quickly enough, with Bitfinex announcing that it has integrated bech32 address generation to its platform. This move allows users to deposit funds via SegWit and keep undue stress off the blockchain’s processing power.
Transactions making use of SegWit don’t need as much data stored on the blockchain as regular transactions. When the update started to spread out, it “raised” the block size without actually increasing it. There’s much contention between groups like Bitcoin, Bitcoin Cash, and Bitcoin SV over how to scale a blockchain up, be it increasing the block size or streamlining transactions. Some groups argue that increased block sizes pose a larger threat to enable miner centralization, but that’s already happening pretty rampantly, so it’s more of a philosophical debate rather than anything else.
Sending And Receiving
Bitfinex had previously upgraded its systems to allow traders to withdraw Bitcoin from bech32 addresses at the end of last month. With deposits now being allowed on the platform, Bitfinex will benefit from SegWit from both receiving and sending funds throughout the exchange.
While Bitfinex and a good number of other world-leading exchanges make use of Segwit to withdraw and deposit BTC, many still don’t. The SegWit upgrade is well over two years old now, but giants like Binance are still lagging behind in this specific segment.
A Strange Turn of Events
However, this has led to a rather amusing chain of events where Udi Wertheimer promised to advertise Binance by making it his profile pic for the rest of the year should Binance integrate SegWit into their exchange. This happened last month, and the CEO of Binance himself, Changpeng Zhao, stepped in to negotiate with the well-known developer.
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 比特神教 Wertheimer (@udiWertheimer) October 2, 2019
They eventually agreed to implement SegWit before 2019 ends. When that happens, Wertheimer will replace his twitter profile picture with Binance’s logo in order to advertise the exchange on his profile. Wertheimer even offered to help Zhao in implementing it in his exchange platform.