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Coinbase Addresses Recent Issues and Future Payment Support Plans

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Coinbase is a very hot company as of right now. That is not always for the right reasons either, unfortunately. The company recently provided a product update to explain what the future holds for this firm as of right now.

Addressing Recent Coinbase Issues and Reports

The year 2018 has been rather eventful for Coinbase in many different ways. Perhaps the biggest issue is how the company got caught up in some recent Visa-related drama. Hundreds of users complained about issues using their payment cards. Some even got charged twice or more time for specific transactions, which is unacceptable. It seems Visa will continue to crack down on all cryptocurrency activity for quite some time to come.

None of these issues were the result of Coinbase doing anything wrong either. Instead, the issue was completely with Visa and WorldPay. Both companies are resolving the problems as we speak. Most duplicate transactions have been reversed without problems.  Some lingering issues still need to be resolved in this regard. Coinbase can’t do anything about this issue as of right now, yet they will keep an eye on things.

There are also some concerns regarding the “cash advance” fees associated with Coinbase transactions. More specifically, some users suffer from an extra fee when buying cryptocurrency through this exchange. This is, once again, not Coinbase’s fault. They are working with their card processing company to iron out these problems. This process will take some time, though, and some banks will continue to charge them regardless.

All users can do is report such incidents to their banks. It is then up to the financial institution to explain the situation or address it accordingly. Buying cryptocurrencies with a payment card will always be a bit cumbersome. It is convenient, but the current fees make it unfavorable. Some users may be entitled to a fee reimbursement, although your individual mileage may vary in this regard.

PayPal Support Will be Removed Temporarily

There is also an update regarding PayPal support. A lot of users are not too impressed by Coinbase’s integration of this payment method. For now, the option will be enabled for a few weeks. After that period, PayPal support will be taken offline and go through an entire revamp. It is a bit unclear what to expect from this change, but it should lead to an improved user experience altogether.

Last but not least, using a bank account with Coinbase is still a solid option. This process also received some big updates, and the entire process is a lot more streamlined as of right now. By setting up the bank account through “instant connect”, users can purchase Bitcoin and other supported currencies right away. Overall, using a bank account with Coinbase is still the best option, for now, at least until all of the issues are resolved accordingly.

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What SegWit Means for Bitcoin, Bitfinex, Lightning Network

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SegWit Adoption

SegWit adoption has been steadily rising since its release in August 2017, albeit not as quickly as some would like. The problem is that it has to happen piece by piece, with each wallet, exchange, or other service provider rolling out the compatible address itself. Because each organization has both its own type of process — as well as its own issues — SegWit adoption has not happened overnight.

This phenomenon explains why the number of SegWit transactions still vary, accounting for between 10 to 20% of total transactions — though that percentage is set to increase. The protocol has already garnered some impressive results: As of today, February 20th, SegWit transactions account for almost 14% of the total — it peaked a few weeks ago when the transactions made up more than 18% of the total for the first time since activation.

As noted above, that percentage is likely to increase soon with announcements today from global leading exchanges Coinbase and Bitfinex confirming their adoptions of SegWit. Among other notable providers that have unrolled the protocol are: Shapeshift, Ledger wallet, TREZOR, Samourai wallet, and Edge Wallet. Several others have deployed SegWit, too, like the Kraken exchange and the CoinMall marketplace. 

Bitfinex

As for users of SegWit enabled exchanges like Bitfinex, the most noticeable changes in the short term will be, simply, a more efficient transaction process, with decreased transaction fees and improved speed — as a result of being able to fit more SegWit transactions in Bitcoin blocks. According to the company’s blog post today, the SegWit implementation means Bitfinex users “can benefit from lower BTC withdrawal fees (approximately 15%) and improved processing times on transactions across the Bitcoin network.”

Bitfinex CEO Paolo Ardoino puts it as follows:

“As a premier exchange, Bitfinex is committed to improving its market-leading offering for our loyal and discerning customers. SegWit provides not only an immediate benefit for users but also a foundation for future Bitcoin development. By supporting SegWit addresses, Bitfinex is tackling three of the biggest crypto-enthusiast concerns: transaction fees, transaction speed, and total network capacity. We are delighted that through this implementation we can provide our customers with bitcoin withdrawal fees that are up to 20 percent lower, as well as faster-than-ever transaction speeds.”

Lightning Network

In the context of the Bitcoin scaling issues, it’s important to discuss the development of another promising concept: Lightning Network (LN). Being initially introduced with the aim to, simply, make the Bitcoin network more useful, LN is a decentralized network of payment channels which permit users to make micropayments between two parties without the need to broadcast directly to the blockchain. As a result, transaction fees are decreased and the speed of the whole payment process is too.

Cryptocurrency idealists have envisioned Bitcoin becoming a sort of “free banking” system from the start. Consider LN in that context: Just like people don’t have to carry around weights of gold to engage in commerce, Bitcoin users need not clear all transactions “on-chain” to enjoy the benefits of the digital currency. With LN, they can transact using the network and clear their balances on the underlying blockchain — just like how people exchange gold-backed notes with banks. The most exciting part, in this example, is that rather than needing to rely on an intermediary bank, LN permits people to act on their own.

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SegWit Finally Embraced by Coinbase and Bitfinex, Bright Future Ahead

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Today, Coinbase — cryptocurrency exchange, brokerage, wallet, and operator of GDAX — and Hong Kong-based exchange Bitfinex have announced the implementation of P2SH Segregated Witness (SegWit). As per the companies’ tweets, users will experience improved transaction processing times and lower fees across the Bitcoin network.

For Coinbase, this process began in December, when vice president and general manager Dan Romero indicated to investors and users that the exchange would adopt the SegWit protocol in early 2018

The protocol, an oft-debated measure introduced as a means of scaling Bitcoin to meet increased demand, is expected to decrease congestion in the cryptocurrency’s network, resulting in faster transaction times and lower fees.

Fees have been a huge problem for Bitcoin users — although they have fallen to recent lows at an average of $0.79 on Sunday. In December, amidst an upsurge in use and value of the cryptocurrency, prices reached peaks of up to $34.00.

What is SegWit?

SegWit is a Bitcoin protocol improvement that facilitates scaling. The SegWit implementation will provide Coinbase and Bitfinex users with lower transaction fees and improved processing times on transactions across the Bitcoin network. This happens by increasing block size limits by separating signature data from transaction data.

In addition to increasing capacity, SegWit will also effectively fix transaction malleability, a potential attack based on the modification of transaction IDs prior to network confirmation. Further, SegWit also lays the foundation for future Bitcoin development efforts like the implementation of Lightning Network, which will permit the network to process millions to billions of transactions per second.

Looking ahead

Moving forward, the question is what will happen as the Bitcoin network continues to grow. A hard-coded limit on the size of blocks limits how many transactions the network can process per second.

Some in the bitcoin community wanted to simply raise the block size — see Bitcoin cash. Instead of increasing the maximum block size, SegWit separates cryptographic signatures from the rest of the blockchain data, so these signatures aren’t counted against that one-megabyte block-size limit — consider it a de facto block-size increase.

That said, SegWit is not the be all end all: If 100% of transactions use the new protocol, it will roughly double the network’s capacity — but that’s it. Further increases will require more radical changes.

Coinbase

Romero said the exchange has carefully considered the implications of adopting SegWit:

“In terms of our engineering priorities, securely storing customer funds remains our top priority. Our next priority is to ensure that our platform remains performant during periods of peak volume,” Romero said.

The adoption of SegWit is a huge undertaking for the Coinbase because its platform is much larger than most other digital currency exchanges. The exchange has millions of users active each month, and it accounts for a significant portion of all Bitcoin trading. This means the impact of its decision to adopt SegWit could have repercussions on the entire cryptocurrency space.

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