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What Caused the Sudden Drop in SegWit Blocks on Bitcoin?


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Blockchain detectives and Lightning Proponents may have noticed a severe drop in SegWit blocks near the end of last month. SegWit-spending transactions had reached a high of nearly 50% of all transactions, according to this tracker, but around about October 20th the rate began to drop off, hitting a low of nearly 40%.

Users who noticed might have been mystified – if those many people were previously spending SegWit-enabled inputs, why would they suddenly stop? SegWit transactions generally cost less as they are smaller in actual size, and therefore it is less expensive to send them with priority.

A Bitcoin newsletter familiar with the deep technological aspect of Bitcoin has a theory that makes sense: at least one major mining pool accidentally stopped processing the transactions.

A simple explanation for this sudden decrease and rebound could be a minor misconfiguration. By default, Bitcoin Core does not produce segwit-including blocks in order to maintain getblocktemplate (GBT) compatibility with older pre-segwit mining software. When miners change their software or configuration, it’s easily possible to forget to pass the extra flag to enable segwit. To illustrate how easy it is to make this mistake, the example below calls GBT with its default parameter and its segwit parameter—and then compares the results by the total potential block reward (subsidy + fees) each block template could earn.

SegWit Pushing Toward Being the Norm

Segregated Witness, or SegWit for short, is a scaling solution pioneered Pieter Wuille, Eric Lombrozo, and Johnson Lau. SegWit separates data from blocks that was previously included in such a way that many more transactions are able to fit into a single block. A side benefit was a requisite increase in the size of blocks themselves, although many miners do not process blocks larger than 1MB.

SegWit was one of a few answers to network congestion in Bitcoin and played a big role in the great scaling debates of 2015 to 2017. Combined with Lightning Network, SegWit is Bitcoin Core’s answer to the scaling problem: offchain transactions and more efficient blocks means a better network overall, in their view. Another camp of people believed that the first and most important change to the protocol should be an increase in the size of blocks, and this philosophy eventually led to the hardfork and creation of Bitcoin Cash.

Over the past 13-14 months, SegWit transactions have steadily increased, such that now as many as 1 in 2 transactions is SegWit-based or enabled. It is plain to see that as time goes on, SegWit will be the norm, and secondary enhancements to the network like Lightning will enable regular users to save money and save resources for the network. Lightning is far from the last scaling solution in Bitcoin. Other sidechains such as Liquid have already come about.

Featured image from Shutterstock.

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Bitcoin Cash Price Gets Skewed due to Exchange Trickery

A lot of confusing action is taking place where the Bitcoin Cash price is concerned. Although its actual decline in value is quite obvious for everyone to see, the real price of BCH is not necessarily what people can see on Coinmarketcap. This is primarily because numerous exchanges treat BCHABC as Bitcoin Cash already despite nothing being decided in terms of which chain will be the longest. Bitcoin Cash Value Fluctuates Heavily Depending on where traders look at, the price of Bitcoin Cash will be either close to the $400 level or down to $250-ish. That is quite a large gap between prices, yet one that is also very easy to explain. Bitcoin Cash, as people knew it before the fork, no longer exists. Most professional exchanges have also retired this price ticker, for the time being. As the hash war rages on, there are still a lot of unknown factors waiting to be addressed. Despite this ongoing kerfuffle, there is a net 5.76% decrease in the Bitcoin Cash price, and a 5.4% decline over Bitcoin. More specifically, that is what CoinMarketCap reports at this time, although this is not necessarily the case whatsoever. In fact, some exchanges are clearly jumping the gun by labeling BCHABC as BCH and thus dragging the Bitcoin Cash price down a bit more. Exchanges currently engaging in this activity include Bittrex and Coinex, neither of which plays a big role of importance when it comes to trading. However, based on the current value of BCH on Bitfinex and Gate.io, it seems a similar incident is taking place. One also has to keep in mind Bitcoin Cash was getting battered ahead of the network split as well. Most exchanges have halted trading of BCH indefinitely, primarily because the currency no longer exists. It is evident either BCHABC or BCHSV will take over that name in the future, but nothing has been decided at this point. As such, any trading referring to just “Bitcoin Cash” or “BCH” should be avoided, as most users can never be sure which currency is effectively being traded under this name. All of this skews the picture pertaining to Bitcoin Cash altogether. Coinmarketcap reports there is still $392m in trading volume for BCH, even though that is virtually impossible right now. With so many exchanges freezing deposits and withdrawals, it is evident actual BCH trading is no longer possible whatsoever. Virtually all platforms have deposits of BCHSV and BCHABC frozen as well, which only makes this market trend more confusing. It is safe to say the entire network split has been a bit of a mess first and foremost. In the case of Bitcoin Cash itself, that name will – under the current circumstances- not be used across exchanges for much longer. Instead, the two separate camps need to be treated as such first and foremost. Until things settle down – with might not necessarily happen anytime soon – the Bitcoin Cash price itself is pretty much irrelevant for most traders and speculators. Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency. The post Bitcoin Cash Price Gets Skewed due to Exchange Trickery appeared first on NullTX.

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