According to an analysis by Mark Murch Erhardt of Chaincode Labs, 88% of all Bitcoin transaction inputs pay higher fees than necessary. Accordingly, only 12% of transaction inputs use the SegWit format, which is less expensive than transactions with old inputs.
88% of all Bitcoin transfers are overpaying transaction fees
Having worked for years as a crypto wallet developer before being hired at Chaincode Labs in 2020, Erhardt is the UTXO manager for commercial Bitcoin wallets, helping them save money on costs. maintenance and transactions related to business in many ways.
Reliance on legacy transaction fees keeps Bitcoin blocks smaller than they could otherwise be, to a seemingly growing backlog of unconfirmed transactions. A congested Bitcoin mempool containing 107 blocks of transactions at a time yesterday serves as a reminder that fees can be saved by making transactions less expensive.
According to Erhardt, the easiest way to do this is to use SegWit for all future transactions. The transition from legacy SegWit transactions to efficient data is needed to minimize blockchain’s bulge.
He stated:
“The longer less efficient output formats are prevalent, the more future block space debt we accumulate.”
Erhardt believes that integration of SegWit into major wallet provision services is long overdue, unnecessary mempool and blockchain bloat:
“It’s been almost 3.5 years since SegWit activated. At what point is it acceptable to consider wallets that cannot send to native SegWit addresses outdated?”
If you wonder why the average blocksize is only 1,320 kB. Apparently, the fees don’t hurt enough yet, since 88% of all inputs still pay more than they need to. pic.twitter.com/zBGPuEQk8e
— ????? (@murchandamus) February 10, 2021
SegWit transactions currently account for about 51% of all Bitcoin transactions; a statistic that is likely to increase in size as commercial wallet providers face the growing demand for SegWit address support. The estimated minimum fee for inclusion in the next block is currently 149 sat/byte, which equates to a fee of $ 14.97 at $ 44,870 per BTC.
Although SegWit transactions are not technically smaller in size than legacy transactions, the components of their data have different weights when including them in a block.
Data related to the witness component of a transaction is considered unnecessary to an active blockchain and is therefore discounted when calculating the total size of a transaction. This makes SegWit transactions appear smaller and therefore require fewer fees to process – they are confirmed faster than the old transaction for the same fee.
One of the most popular and tested Bitcoin wallets with SegWit support is Electrum, which also supports multi-signature transactions and the import/export of private keys. More and more major exchanges are adopting SegWit support, including Bitstamp, BitMEX, and most recently Binance. This means that transactions to exchanges can also be made cheaper by sending them from a SegWit address.
Read more:
- Bitcoin Price Fell Slightly Today, While Many Cryptocurrencies In The Market Surged
- A Former British Member Of Parliament Is Urging Central Banks To Ban Bitcoin Because Of Its Excessive Energy Use