Finland-based peer-to-peer bitcoin exchange LocalBitcoins has announced its wallets are now segregated witness (SegWit) compatible. The popular buying and selling platform joins the likes of Bitwala and Wikileaks, who undertook similar steps in December 2017.
LocalBitcoins tweeted “New receiving addresses for your LocalBitcoins wallet are now SegWit compatible. SegWit addresses start with the number 3.”
— LocalBitcoins (@LocalBitcoins) January 2, 2018
How SegWit Will Benefit LocalBitcoins Users
The LocalBitcoins platform is mainly used by individuals to exchange small amounts in multiple transactions. It also facilitates off-exchange trading for local currency in each market where it operates.
Off-exchange or over-the-counter (OTC) trading is a practice where two parties directly trade, without the supervision of any exchange. While this is slightly more private than online exchanges, LocalBitcoins users are still expected to comply with local money transmission and KYC regulations for currency exchangers.
LocalBitcoins has recently witnessed record-breaking deals completed, amounting to $134 million USD between December 16th, 2017 and December 23rd, 2017, just before the holiday weekend.
SegWit to Cut Fees by 50%
The SegWit protocol was initiated on Bitcoin via a soft fork in August 2017, with an aim to free space in transaction blocks to efficiently utilize their limited memory space. The protocol separates the cryptographic “signatures” of each transaction, resulting in a reduced amount of transaction data on the network.
The implementation also altered how block size and “weight” are calculated, and works as a foundation for executing a number of proposed second level solutions. Third party services must update their systems to be compatible with the changes — and end users will experience no difference except (hopefully) cheaper transaction fees.
GreenAddress, a Malta-based wallet, tested SegWit in September 2017 and concluded that SegWit enabled transactions incur half the fees of non-SegWit transactions.
Bitcoin fees have soared in recent months, at times reaching over $40 USD on average and discouraging BTC spending for smaller transactions. Many merchants and processors have either stopped accepting bitcoin or changed their policies as a result.
This has allowed other cryptocurrencies to enter the mainstream and promote their coins as credible alternatives. For example, Ripple claims to process transactions at almost no cost, and settles in four seconds — 1800 times quicker than bitcoin.
Will more wallets implement the SegWit protocol soon? Let us know your opinion in the comments section.
Images via LocalBitcoins, Pixabay