Only 6 out of 18 exchanges have fully adopted the Bitcoin SegWit update

Segregated Witness, abbreviated as SegWit, is a Bitcoin protocol extension that was activated on the network in August 2017 to increase the scalability of the Bitcoin blockchain. Before SegWit was activated, the Bitcoin network often had congestion problems as users filled the 1-megabyte size of Bitcoin blocks.

To reduce congestion and increase network throughput, SegWit improves on two key variables. One allows smaller transactions, allowing more transactions to be processed in a fixed block space. Besides, it also allows for larger blocks and more transactions to fit per block. Taken together, these improvements increase the overall throughput of the Bitcoin network.

Exchanges consume 40% of the total storage space of bitcoin blocks

Featured in report Recently, blockchain analysts Glassnode studied the SegWit adoption rate of major crypto exchanges.

Exchanges are critical to SegWit adoption as they are large consumers of Bitcoin block space, and as exchanges adopt SegWit they will consume less block space, contributing to better overall Bitcoin network performance.

According to Glassnode, exchanges account for about 40% of all block space used, and their stance on SegWit has a significant impact on Bitcoin’s scalability. Binance and Coinbase alone account for about 25% of the block space used.

Block exchange space usage | Source: Glassnode

Unfortunately, Glassnode has found that the majority of exchanges have not fully adopted SegWit, most notably Binance, which is responsible for consuming about 15% of Bitcoin’s block space.

Pioneers, laggards and followers

In the study, Glassnode evaluated Bitcoin transactions flowing into and out of exchanges and how those transactions leveraged SegWit. The study then divided the tested exchanges into three categories: Pioneers – accepting more than 90% of the time, Stragglers – accepting between 20% and 90%, and Adversaries Holdout – less than 20% using SegWit.

The research included 18 exchanges and of them, 6 have fully adopted SegWit, 6 are still struggling with the widespread use of SegWit, and 6 SegWit-related companies are making very little effort to adopt SegWit.

In particular, Coinbase, which consumes 10% of all BTC block space, has almost completely taken over SegWit.

Binance accepts SegWit Medium

Of all the exchanges, Binance and Coinbase are the biggest consumers of block space. Transactions to and from Binance alone account for about 15% of the total block space.

“Binance has a SegWit adoption rate of just 10% by the end of 2021. Although recently the adoption rate has increased to about 50%. That number doesn’t seem like enough, especially considering that Binance alone has consumed about 15% of all Bitcoin block space.”

Segwit Acceptance Rating of Exchanges | Source: Glassnode

The study shows that the 18 exchanges, in descending order of SegWit adoption, are:

• Pioneers: FTX, Kucoin, Coinbase, Luno, Kraken and Bitstamp.
• The laggards: Gemini, Hibtc, Coincheck, BitMEX, Bitfinex and Binance.
• Owners: Okex, Bithumb, Bittrex, Huobi, Poloniex and Gate.io.

Among the exchanges in the swarm, “Okex is the only exchange that has at least made an effort to adopt SegWit, with an adoption rate of 7%. Meanwhile, the rest of the exchanges appear uninterested in upgrading their infrastructure in favor of the broader Bitcoin network,” the study concluded.

Join CoinCu Telegram to keep track of news: https://t.me/coincunews

Follow CoinCu Youtube Channel | Follow CoinCu Facebook page