BitMEX recently announced its support for withdrawing bitcoin to the Bech32 (native SegWit) address format. The upgrade is effective already. But, how will this upgrade affect users?
Bech32 Sending Support
As of today, BitMEX users will be able to withdraw Bitcoin to three address formats. This implies that the address to which Bitcoin is being withdrawn can be in the Bech32 format.
The deposits, however, will continue to remain in the Pay to Script Hash (P2SH) format addresses because of the exchange’s multi-signature wallet solution.
As per the blog –
“This upgrade is part of BitMEX’s continued commitment to optimize our Bitcoin wallet infrastructure and technology, in order to reduce our usage of blockweight and to lower transaction fees for our customers.”
How Will Users Benefit From This Upgrade?
For users, the upgrade means lower transaction fees when they spend Bitcoin which has been withdrawn to Bech32 addresses. They will not save on fees when they withdraw their Bitcoin from BitMEX, but when they spend the Bitcoin withdrawn from BitMEX to a Bech32 address, they may experience savings in transaction fees.
The reason for why these savings may occur is that when users spend from a non-native address using Segwit, they have to add 20 bytes of overhead. However, when they use native SegWit-style addresses (Bech32), the need for the 20 bytes of overhead is eradicated thereby resulting in smaller transaction size, and thus, the savings.
The figure below shows how transaction size varies with the input redemption type –
Here are the typical percentage savings for a 1 input 2 output transaction –
Owing to the witness discount on the signature/scripts, the more inputs a transaction has, the more will be the savings. Thus, larger transactions, with more than one input, will typically experience higher savings than smaller transactions.
In the blog, BitMEX has also shared that their next priority for the BitMEX wallet is enabling SegWit (non-native). The upgrades related to the adoption of Segwit will resulting in BitMEX benefitting from a blockweight saving of around 65%.
Other Exchanges With Bech32 Support
Several other leading exchanges including Kraken, Bitfinex, Bitstamp, HitBTC and Gemini have already implemented support for Bech32 addresses. Gemini is one of the few exchanges which has Creating/Receiving support as well along with Bech32 Sending support.
A comprehensive list of software wallets, hardware wallets, web wallets, exchanges, Bitcoin ATM models, blockchain explorers, payment processors and other services with Bech32 address format support can be found here.
Disclaimer The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.