One of the largest exchanges by volume – Binance, introduced deposits using Segregated Witness, or SegWit.
According to the official announcement, the new improvement was introduced on Christmas Day. Previously, the protocol update was only available for withdrawals. From now on, Binance users can transfer funds to the SegWit (bech32) address by selecting the BTC (SegWit) network.
Please note that SegWit should help reduce fees, however, if you incorrectly send non-compliant assets to this address, funds cannot be recovered and will be lost forever.
SegWit and Lighting Network
Deployed in 2017, SegWit is an upgrade to the Bitcoin protocol. It is designed to help scale the network and fix errors associated with it. SegWit is known for the way it updates blockchain data, namely separating signatures from transaction data. This protocol update allows more transactions to be stored in one block, thereby increasing the transaction capacity.
Data from transactionfee.info show that around two-thirds of BTC payments are processed through this protocol. Although Bitcoin was originally developed as a monetary instrument to store value, it still suffers from scalability limitations that some say make it difficult to adopt for daily use.
The Lighting Network was created as a realistic Tier 2 scaling solution for Bitcoin. Unlike SegWit, which was a soft fork for the Bitcoin protocol, the Lightning Network is an additional layer that can allow instant and cheaper transactions.
Despite its limited transaction capabilities, Bitcoin remains the de facto leader in the digital currency market. His dominance over other assets recently reached an annual record. At the time of writing this article, Bitcoin’s dominance is over 68% according to CoinMarketCap.
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