What happened to the solutions Segwit was supposed to provide to Bitcoin?
For those who want a quick recap of what Segwit is here's an old pre-segwit activation article summarizing it:
Source: http://www.investopedia.com/terms/s/segwit-segregated-witness.asp
Segwit was supposed to solve the growing problems of the Bitcoin network and had promises like:
- The increase of block capacity by allowing more than double the amount of transactions included per block.
- Cheaper transaction fees.
Did Segwit manage to solve these problems?
Let's see the effect Segwit had:
1) Transactions per block:
These are the average number of transactions per block within a year with the Blocksize limit already getting congested. As you can see the number hits the ceiling of around 2200 transactions.
Source: https://blockchain.info/charts/n-transactions-per-block?timespan=1year
AFTER SEGWIT...
Here are the Bitcoin blocks mined recently and the number of transactions included are more or less the same as before Segwit was activated with the exception of 2 noticeable blocks exceeding 2500 transactions. But these are still exceptions, more time is needed for a fair comparison between the average number of transactions before and after segwit.
Source: https://blockexplorer.com/blocks
Did Segwit improve the transactions congestion in the mempool?
As we can see with this chart below, the number of transactions waiting to be confirmed are still growing without a considerable difference, it is even growing more than ever with the Segwit hype increasing the number of Bitcoin investors.
It peaked on August 23 to over 100,000 TRANSACTIONS still waiting to be confirmed... But this was before Segwit.
An interesting thing we instantly notice is the sudden dip of the Mempool we see on the chart. That was the moment Segwit activated. Not really sure what that means, a temporary glitch when Segwit activated? Who knows?
Source: https://blockchain.info/charts/mempool-count
2) Transaction Fees
A popular idea is going around the internet saying that Segwit would decrease the transaction fees. And I think the logic behind that is that as there is more SUPPLY of space in the 1 MB blocksize limit the PRICE would naturally decrease (This would follow the Economic Law of Supply and Demand.)
AFTER SEGWIT...
Source: https://www.blocktrail.com/BTC
The image above, as of this writing, shows the
- Optimal Transaction fee
Based on the last 30 blocks this is the lowest possible fee that has more than 75% chance of getting into the next block. - Low Priority Transaction fee
Based on the last 30 blocks this is the lowest possible fee that has more than 75% chance of getting into the next 2 blocks.
With the price of Bitcoin at $4373.62 the prices would translate to:
Optimal Transaction fee = $18.89 per transaction
Low Priority Transaction fee = $15.83 per transaction
To put these into context there was a time before the 1 MB blocksize limit was reached when transaction fees were virtually zero with fees as low as a few cents...
But we should take note that these are optional transaction fees recommended if you want to have at least a 75% chance of getting confirmed in the next block, otherwise your transaction could take a while to be processed.
When faced with these contradictions of their supposed solutions to the problems the people behind getting Segwit on Bitcoin have some very interesting views:
"...Bitcoin Core developers, and in particular employees of Blockstream Corp, think such time is needed for blockchain fees to increase so that once LN is ready everyone, except for LN hubs, stop using the blockchain."
That's right. They want us to stop using the blockchain once the Lightning Network arrives.
That's making "Bitcoin" sound more and more like another Paypal or Visa payment system with us relying once again on THIRD-PARTY companies and banks.
The sad thing is I suspect the vast majority of new Bitcoin users will have no idea that they are slowly being led back to the old dinosaur financial system of bankers that the original pre-segwit Bitcoin and Satoshi Nakamoto stood against.
The evidence of the deceit speaks for itself with the empty promises of Segwit today.
Will Segwit improve over time and make things better? Does it really matter anyway? When Segwit then moves on to the Lightning Network, which supposedly promises faster transactions, will it really deliver the way Segwit has so far delivered? Or will it continue on with high transaction fees, slower confirmation times and more questions than answers? The Segwit developers are showing no signs of backing down or changing directions.
Will this hurt Bitcoin and lead people to other alt-coins? Was this their intention all along? Only time will tell.