Anyone aware about cryptocurrencies isn’t unknown to the issues bitcoin network is currently facing. While there are those who are trying to sort it out, there are those who allegedly aren’t making use of the block space efficiently.
Few such entities are Coinbase, Blockchain and Gemini who according to Jameson Lopp, the lead engineer and architect at multi-signature blockchain security service provider BitGo are inefficiently using the block space. Coinbase has been time and again heavily criticized for the absence of Segregated Witness (SegWit) and transaction batching on its platform.
Lopp said that there are several major cryptocurrency exchanges including Bitstamp, HitBTC, Kraken, LocalBitcoins, and QuadrigaCX who are using both SegWit and batching IIRC.
According to the bitcoin and market data provided by Blockchain, the second most popular wallet platform in the cryptocurrency market, the size of the bitcoin mempool remains above 121 million bytes, with blocks averaging at 1.05MB. On the Bitcoin network, the mempool operates as the holding area for unconfirmed transactions. Miners have to pick up transactions from the mempool to verify and confirm payments, and send the transactions to the main Bitcoin blockchain.
If the Bitcoin blockchain network’s mempool is congested, it is difficult for the miners to process transactions in a speedy manner, decreasing the usability, efficiency, and accessibility of bitcoin as a digital currency and a medium of exchange.
Many from the cryptocurrency sector alongside Lopp have time and again voiced their concern over Coinbase and Blockchain not implementing dynamic fee systems, SegWit, and batching to reduce fees for their customers and for the entire Bitcoin network.
Large-scale platforms like Coinbase process more transactions than 70 percent of the businesses in the industry combined. As such, the impact Coinbase has on the ecosystem of bitcoin is truly immense.
In response to the criticism, Brian Armstrong, the CEO at Coinbase, announced that the company will add SegWit, batching transactions, and other innovative solutions to improve the backlog of transactions on the Bitcoin network. He stated:
Whether the integration of SegWit and batching transactions can drastically improve the scalability of bitcoin and reduce congestion on the Bitcoin network by large margins remain unclear. But, the overall stance of the bitcoin community as of now is to have SegWit and batching completed first, and discuss on-chain scaling and block size increase after, if SegWit and batching are not sufficient.