SegWit is an impressive upgrade that reduces effective transaction size and packs more transactions into the bitcoin network, which lowers fees and sets the foundation for future scaling prospects. Pretty much everybody who loves bitcoin agrees that the greater the SegWit adoption rate, the better off we’ll be.
Yet, surprisingly, SegWit is only utilized by around 40% of bitcoin transactions today. This means the throughput of the bitcoin network is not fully optimized. Available space is being wasted, which results in higher fees for everyone. Right now fees are fairly affordable, but we could easily see transaction fees in the tens or hundreds of dollars again, just like we did last year. So why hasn’t SegWit reached 100% adoption?
One reason could be a lack of sufficient incentives. The majority of current SegWit transactions are wrapped inside of an address format called P2SH, which is backwards-compatible with clients that don’t support SegWit. This allows the receiver of a transaction to utilize SegWit even if the sender doesn’t support it yet. This is a great way to let individual users do their own part to drive adoption forward, but it doesn’t do much to encourage the sender of the transaction to upgrade. P2SH-segwit is substantially better than legacy addresses, but it isn’t the best option available.
Bech32 is a new address format created specifically for SegWit. It allows the direct use of SegWit without the wrapper, on top of other improvements such as more efficient QR codes, and better error correction, but is not readable by clients that don’t support it. The hope for SegWit, as shared many industry experts, is to transition fully to Bech32 and move away from wrapping SegWit transactions in P2SH.
To do our part, the BRD crypto wallet will convert to 100% Bech32 receive addresses. Support began with an opt-in period beginning in October 2018, allowing all forward-thinking pioneers to take the plunge into the new Bech32 world and turn their smartphones into a pure SegWit machine. Thereafter, once real momentum is established, these changes will be rolled out to our entire user base as the default setting, which will greatly speed up the rate of adoption.
Our goal is to promote Bech32 as the default address format and simultaneously discourage the use of P2SH and regular legacy addresses within our product. In doing so, senders to a BRD app will have a compelling reason to upgrade their software to serve our customers. The good news is that sending to a Bech32 address is an easy feature to implement (https://github.com/sipa/bech32), making the transition reasonably straightforward (BRD has had this capability since early 2018). Once sending to a Bech32 address is widely supported, it will be even easier for everyone to switch to Bech32 receive addresses and go full SegWit. Other businesses will decide when to install full Bech32 send and receive support according to their priorities, but simple sending is an easy and sensible task that can be accomplished in the short term.
In preparation of this transition, it is important to get as many companies and services as possible to voluntarily start supporting Bech32 sending capability. We are proud to have already secured pledges from 5 of our valued partners—Changelly, Simplex, Kraken, Coinberry, and Coinify—to update their software and enable the ability to send to Bech32 to continue serving our customers. Encouragingly, many of these partners have persuaded their own partners to upgrade as well, demonstrating some early success in the campaign.
But we won't stop there, and neither should you. As far as we are concerned, this is a community-driven campaign where all advocates are welcome. On this page we will collect a comprehensive list of companies and services that offer Bech32 functionality to illustrate progress made towards this goal, whether they have pledged some level of support, implemented the crucial “send only” component, or decided to go all the way with full support. We will update this page regularly, and if you know of a logo that should be here but isn't, or if you are a service that needs a little help adding Bech32 support, please send an email to Aaron Lasher at [email protected].
Additionally, we have created an endorsement section for organizations and influencers to throw their weight behind the initiative, building on their impact to enact the change we all want to see.
To all the bitcoiners out there, we encourage you to join us: Share this page, start a discussion, be among the first to go full Bech32, and with your help, we'll get SegWit to 100% and secure a bright future for Bitcoin.
Aaron Lasher, Co-Founder and Chief Strategy Officer at BRD
James MacWhyte, Chief Product Officer at BRD
Aaron Voisine, Co-Founder and President at BRD