Coinbase has announced that it now supports Bitcoin Segregated Witness (SegWit) transactions. Over the next week, the exchange will be gradually enabling SegWit compatible Bitcoin sends and receives for all its customers. To learn more, visit Coinbase's SegWit FAQ page.
What is SegWit?
For those unfamiliar with SegWit, this upgrade helps reduce the size of Bitcoin transactions. This improves the overall transaction capacity of the Bitcoin network and should also help reduce the fees customers pay on bitcoin transactions. You can read more about SegWit here.
A common piece of feedback from customers is transaction fees for sending Bitcoin on Coinbase are too high. While transaction fees in Bitcoin have recently decreased, Coinbase states that it is committed to providing its customers with options that can help reduce fees.
While SegWit should help reduce fees, once Coinbase begin rolling out this change, should customers incorrectly send Bitcoin Cash (BCH) to a Bitcoin (BTC) address, the funds will not be recoverable. Sending the incorrect digital assets to a deposit address will result in a permanent loss. Ouch!
SegWit is an important step in scaling the Bitcoin network and with a continued investment in Bitcoin infrastructure with implementation for additional Bitcoin scalability improvements, such as transaction batching and improved UTXO management. Coinbase hopes this will all result in lower fees for customers and more capacity on the Bitcoin network.