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Bitcoin transaction fees are high and it is costing users around $1 to $5 to send a single transaction. Wallet platforms and their fee estimators are recommending users to attach a fee of 250 satoshis per byte, which is substantially higher than the estimated fee before SegWit was activated.

The Bitcoin Core development team’s transaction malleability and scaling solution Segregated Witness (SegWit) was expected to optimize bitcoin blocks by 75 percent. However, upon its completion, experts including former Bitcoin Core contributor Jeff Garzik criticized SegWit and the bitcoin network, primarily because fees remained high.

Garzik’s criticism disregarded the fact that in order for users to start enjoying lower transaction fees, users must started to transact and receive SegWit-enabled transactions. At the moment, the vast majority of transactions are normal transactions and are not SegWit-enabled. For users to start sending SegWit-enabled transactions, they either need to receive SegWit-enabled transactions or utilize bitcoin wallets that have fully integrated SegWit.

Over the past few days, two major bitcoin hardware wallets Ledger and Trezor integrated SegWit, allowing users to send SegWit-enabled transactions. Hence, users on Ledger and Trezor will be able to enjoy lower transaction fees and in the upcoming weeks, as SegWit becomes widely integrated by leading bitcoin wallets such as Coinbase and Blockchain, an increasing number of transactions in bitcoin will be SegWit-enabled and transaction fees across the network will decrease substantially.


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It is important to emphasize that SegWit did not fail to lower transaction fees contrary to what some experts and users believe. It takes time for SegWit transactions to take over the bitcoin network and until then, normal bitcoin transactions without SegWit will have to deal with traditional fees.

Ledger and Trezor prioritized the integration of SegWit due to its important security benefits for hardware wallets. Because it significantly reduces confirmation times, for Ledger and Trezor, SegWit is an important security enhancement. More importantly, the Ledger development team explained that with SegWit, bitcoin fees will decrease by around 35 percent.

“Segwit introduces the concept of block weight which changes the way the transaction size is computed by splitting the signatures in a different area — you can typically save 35% of the fee paid when sending a transaction immediately,” said Ledger.

In an interview with CCN, Bitcoin Core contributor and Ciphrex CEO Eric Lombrozo confirmed that as more wallet platforms continue to integrate SegWit, bitcoin fees in the network will decrease and eventually, bitcoin will be able to scale proportionally.

Lombrozo also noted that many analyst suspect an ongoing spam attack to the bitcoin network from a group of miners that are motivated to block SegWit and stall the scaling progress. Some miners could spam the network with extremely small transactions and attach sufficient fees to finance their operations. That way, spam attacks can be sustained in the mid-term without causing financial damage to miners.

Unusual movement, mempool size up immediately after SegWit activates.

In an interview with BraveNewCoin, bitcoin analytics platform OXT developer Laurent explained the likelihood of bitcoin spam attacks negatively affecting the bitcoin network. He stated he is 95 percent certain stress test and flood attacks affected bitcoin transactions until January of 2017. If so, it is also likely that spam attacks are targeting the bitcoin network at the moment, which explains the unexpected spike of mempool size and transactions immediately after the activation of SegWit.

Featured image from Shutterstock.

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Posted by Joseph Young