Binance traders can now deposit and withdraw to SegWit (bech32) addresses.
Binance, one of the world’s largest volume exchanges of crypto currencies, has incorporated support for Segregated Witness, or SegWit, for Bitcoin deposits (BTC).
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SegWit support was extended to the warehouses on Christmas Eve, Binance said in an official statement. The protocol update was initially enabled for withdrawals only.
Effective immediately, Binance users can transfer funds to a SegWit (bech32) address by selecting the BTC network (SegWit). Binance explained:
„Please note that SegWit should help reduce fees; however, if you incorrectly send incompatible assets to the address, your funds will not be recoverable and will result in a permanent loss.
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Implemented in 2017, SegWit is an update of the Bitcoin protocol designed to help scale the network and correct associated errors. SegWit is known for the way it updates the data in the block chain, i.e., separating signatures from data and transactions. This protocol update allows more transactions to be stored in a single block, thus increasing transaction capacity.
Data from transactionfee.info shows that approximately two-thirds of Bitcoin payments currently use SegWit. Although Bitcoin has emerged as a monetary instrument for storing value, it still faces scalability limitations, which some say have prevented its adoption for everyday use.
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Lightning Network has been offered as a viable layer 2 scaling solution for Bitcoin as a payment protocol. Unlike SegWit, which was a soft branch upgrade of the Bitcoin protocol, Lightning Network is an additional layer that could allow for instant transactions at lower cost.
Despite the limited transaction capacity, Bitcoin remains the de facto leader in the digital coin market. Its dominance over other cryptoactives recently reached a one-year high. At the time of writing, Bitcoin’s domain rate was 68.7%, according to CoinMarketCap.