Bitcoin Scalability Update: SegWit, Transaction Efficiency, and Lightning Network Implementation

Bitcoin SegWit transactions now constitute over 40% of all Bitcoin network activity as adoption continues steady growth amongst scalability concerns.

The SegWit update enabled the network to rapidly clear a backlog of pending transactions during the start of 2018 and its increased adoption resulted in a persistently low average confirmation time of around 15 minutes.

The SegWit update also permitted the Bitcoin network to provide malleability in its transactions, allowing the implementation of functionality like the Lightning Network and atomic swaps operating as a smart contract layer upon the BTC network.

The result of these changes to the core network maintained an average transaction fee below $2 since the start of March 2018, a decrease from the record high of $55 in December 2017.

Xapo's recent adoption of SegWit will enable significant amounts of Bitcoin transactions to be processed as SegWit-enabled, further decreasing costs and network burden.

Research taking place at MIT's Distributed Technology Initiative has provided cutting-edge techniques to reduce the negative cost of scalability on the network further.

The demo utilized an experimental use case for the Lightning Network through the functionality of SegWit with smart contracts to handle millions of transactions with a higher degree of complexity.

Users will be able to draw data from a range of outside sources without having to rely on a single trusted party by pulling data from a network of redundant oracles that operate under an incentivized data integrity scheme.

Companies like ACINQ are lowering the barrier to entry for business adoption by developing a Stripe-like API for the Lightning Network.

As SegWit usage increases to become a ubiquitous network-wide update, the ability for service providers to leverage the extended functionality of the BTC network will integral for mass adoption.