Ledger and Trezor, two leading hardware wallet manufacturers and developers in the bitcoin industry, have announced the integration of the Bitcoin Core development team’s transaction malleability and scaling solution Segregated Witness (SegWit).
On August 24, Ledger became the first bitcoin wallet to support SegWit. In an extensive and analytical article, Ledger explained various benefits for wallet users and general consumers SegWit provides. Perhaps most importantly, Ledger emphasized that SegWit drastically improves bitcoin’s scalability and security of hardware wallets. The Ledger team stated:
“Segwit introduces the concept of block weight which changes the way the transaction size is computed by splitting the signatures in a different area — you can typically save 35% of the fee paid when sending a transaction immediately.”
Foremost, SegWit is a transaction malleability solution. Hence, for hardware wallets like Trezor and Ledger, SegWit is a major security enhancement, especially because it optimizes signature computing for hardware wallets by up to 60 percent. Prior to the activation of SegWit in the bitcoin network, the Trezor development team explained the security benefit SegWit offers to hardware wallets. In January, Trezor wrote:
“It might seem to be a trivial change, but the security implications are large. The lower the amount of operations the hardware wallets need to do, the lower the probability of something going awry. Moreover, with SegWit, wallets do not sign each inputs separately anymore, but first they will hash all the inputs, and then sign the hash. With this method, the amount of operations the wallets have to do is decreased, and thus the transaction creation process is sped up.”
As of current, transaction fees remain substantially high with many users being requested by bitcoin fee estimators integrated into bitcoin wallets to attach a fee in the region of $2 to $5, depending on the size of the transaction. However, the volatility in bitcoin transaction fees resulted by instability in mining and the lack of SegWit-enabled transactions will likely be fixed in the upcoming weeks, as more SegWit-enabled transactions are introduced to the network through wallets like Trezor and Ledger that actively support SegWit.
It has been less than a week since SegWit was officially and fully activated in thebitcoin network. Many wallet platforms and large-scale bitcoin service providers are required to undergo a testing phase before providing SegWit integration and services to users. Once major wallet platforms including Coinbase and Blockchain, the two largest bitcoin wallet platforms in the market, also start to sign "SegWit-enabled transactions, bitcoin fees will substantially decrease by around 35 percent,” as Ledger noted.
In regard to Trezor’s development and integration plan for SegWit, Trezor chief technical officer Pavol Rusnak stated:
“It will be possible later today. Our software wallet can do Segwit for Litecoinsince May, we just did not want to deploy the change (which would enable this for Bitcoin as well) before the weekend. It's not a wise thing to deploy new stuff to production on Friday. Hardware has Segwit for Bitcoin enabled since firmware1.5.1, so some people were already able to do Segwit transactions with TREZOR using alternative clients.”