The digital asset exchange company ShapeShift is now batching bitcoin transactions to reduce transaction fees for its customers and to reduce congestion on the Bitcoin network. Many are pleased, though others are concerned about privacy issues with batching.
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ShapeShift Presses Forward
ShapeShift was one of the first companies to roll out support for the SegWit update to cut bitcoin fees. To add to that legacy, the company announced it’s now adopting bitcoin batching to benefit its customers by lowering BTC withdrawal fees. With batching, transactions use less space on the network, leading to savings.
The peer-to-peer platform ShapeShift claims to “batching nearly all transactions” it manages. Currently, the exchange processes approximately 10,000 bitcoin transactions per day. ShapeShift customers will benefit doubly, then, from SegWit integration and batching bitcoins.
— ShapeShift 🦊 (@ShapeShift_io) March 5, 2018
The official company blog states:
“If you’re a customer, you’ll notice significantly lower transaction fees, currently better than any other exchange in the industry. If you’re not a customer, but still use Bitcoin, you’ll enjoy lower fees as well, since the entire network will now process several thousand fewer BTC transactions every day (with the same number of users and use).”
Batching Txs Reduces Costs More Than Segwit, But Is It really Worth It?
Transaction batching is a process that groups multiple transactions into one transaction ID, or TXID. Several known wallet providers such as Coinbase and Kraken have started grouping transactions to save space on the network and also save money for their customers. Before, many exchanges would have every unique transaction processed with a unique TXID.
Batching has more potential to reduce costs than SegWit because of the high number of bitcoin transactions sent to and from exchanges simultaneously. However, batching has its drawbacks when it comes to privacy.
Last year, Bitcoin developer David Harding pointed out that transaction batching is good and mainly positive, but it can potentially expose your trading activities, saying:
“When you receive your withdrawal from Kraken, you can look up your transaction on a blockchain explorer and see the addresses of everyone else who received a payment in the same transaction — You don’t know who those recipients are, but you do know they received bitcoins from Kraken the same as you. That’s not good for privacy, but it’s also perhaps not the worst thing.”
As such, ShapeShift’s move to bundle all transactions seems to be a positive thing for the space in general. However, the lack of privacy may be an ongoing fly in the ointment.
Will more crypto wallet services adopt transaction batching? Let us know your views in the comments section below.
Images via Business Insider, Steemit