Topic: What is the logic reason behind legacy/segwit wallet address not sending Bitcoin (Read 334 times)

Scam coin Wbtc started collapsing. It's de-pegged multiple times in the last seven days. It started de-pegging on 8th July slowly. They are tricking the chart as well. On 8th July, it returned to 28K for the whole day and regained the equal price of BTC for a short time. On 10th July, It went back to 27K again for the entire day and regained the peg for a few hours. Today it's gone back to 23K and gained a peg every ten minutes and then back to 23K again. This is a warning for the community.

Just like they charge almost nothing to withdraw fake bitcoin tokens on their scam chains. Anything to entice people to leave the actually valuable asset - bitcoin - under Binance's control so they can risk it to make themselves profit.

Maybe ask the users of Celsius, Voyager, BlockFi, and others how that worked out for them.

Some people that know about wBTC use it for staking and earn some coins using APR to calculate the earning. The staking APR is very small compared to the bull run time profit of bitcoin.

Trustwallet is open source before. Binance bought it and gradually make it close source.

It was acquired later, but it really doesn't matter. What was sometime in the past open-source makes no difference to the fact that its "upgraded" closed-source version is prone to errors, is not transparent, not private etc.

There is none, unless you find Binance very useful as exchange to trade shitcoins. As far as I know, they charge nearly nothing when trading wrapped bitcoin for some altcoin.

I don't see any reason to use wrapped Bitcoin when we can easily buy ORIGINAL Bitcoin. As I said in my previous post, the Bitcoin transaction fee is still tolerable even after the BRC-20 craze. Using wrapped Bitcoin means you give your money to someone, and he gives you a voucher in return which you can use in some specific shops. These shops can deny accepting that voucher whenever they want because it doesn't worth anything anymore, and you might not find the person who gives it to you.

I guess it was open-source before Binance bought it. Or was it owned by Binance from the beginning?

Exactly this. Custodian doesn't want to redeem your token? You've lost everything. Custodian is insolvent? You've lost everything. Custodian exit scams? You've lost everything. Etc. And while you are playing around with your worthless wrapped IOUs, the custodian is most likely lending/investing/risking your bitcoin to make themselves profit, as was the case with Celsius, Voyager, BlockFi, FTX, and every other custodian which has collapsed over the past year or so.

It's all one big centralized scam.

True. It's also closed source. You would do well to avoid it.

I've learned something new. I heard Trust Wallet is owned by Binance. Not sure if it's true as well.

Coinmarketcap.com is owned by Binance, which brings us back to the exchange that tries to trick gullible customers into accepting counterfeit Bitcoin.

According to coinmarketcap:

WBTC is also backed by Bitcoin at a 1:1 ratio via a network of automatically monitored merchants and custodians, ensuring that its price is pegged to Bitcoin at all times and allows users to transfer liquidity between the BTC and the ETH networks in a decentralized and autonomous manner. All to-be-converted BTC is held by a custodian, who takes part in the actual minting and burning of Ethereum-based tokens. When WBTCs are burned, the user can reclaim their BTC balance from the custodian. During mining, users send BTC to the custodian for storage and receive an equivalent in WBTC tokens. BitGo is the biggest custodian for Wrapped Bitcoin, and they will mine a certain number of WBTC and send them to the merchant's Ethereum address.

The user who wants to swap between wBTC and BTC performs a trade — through a centralized exchange or atomic swap on a decentralized exchange — to move funds to the merchant. Once finalized, the user can use their BTC/wBTC as they see fit. If WBTC is converted to BTC, the associated Wrapped Bitcoin balance will be destroyed through a burn transaction.

https://coinmarketcap.com/currencies/wrapped-bitcoin/

So, You are trusting Bitgo with your Bitcoin.
It's the same as trusting an anonymous person online by giving them your private keys.
There is no point in using Wrapped Bitcoin while the Original Bitcoin is in front of you. This does not make sense. Bitcoin fee is still tolerable even after the BRC-20 Craze.

It doesn't matter. Even if you have absolute proof that Binance owns all the Bitcoins they claim to have "wrapped", you're still completely at their mercy when it comes to getting real Bitcoin for their home-made substitute.

Exactly. So proven or unproven, their made-up token works as long as they let you.

It's worse than fiat money. At least fiat is controlled by your own government, Binance's made-up counterfeit Bitcoins are controlled by a billionaire hiding in the Cayman Islands.

Prove it.

I'm not trying to be facetious here - can anyone actually prove this? The answer is no. Remember their whole "proof of reserves" nonsense a few months ago which actually proved nothing at all? All but forgotten now. No mention of the liabilities their reserves were supposedly backing up, no mention of the fact that millions of dollars of crypto were transferred in to their accounts the day before their "not-an-audit", no mention of their uncollateralized "stable" coins. All you have is Binance's word that their scam coins are actually collateralized with bitcoin, and given that Binance have a long history of openly lying to users, investors, regulators, and the government, their word is worth less than nothing.

Because it is completely centralized. Binance own and control the chain. Transaction confirmation can be instant in the same way I can update the entry in a spreadsheet stored on my computer instantly. There is no risk to Binance of double spending because Binance are in complete control at all times and can simply seize coins from any address they want.

It is a centralized, printed-out-of-thin-air, scam.

They are both worse.

UST from Terra scam: https://www.coingecko.com/en/coins/terraclassicusd.

UST was a stable coin pegged with USD. It has become dead. The price now is $0.01211964.

We should not trust anything that is pegged. We are saying the same thing, we should not trust anything that is pegged.

We have diverted away from topic.

What I will say is that we should avoid any site that do not allow you to send to segwit address. They are lazy or not having enough money to upgrade and these can make them got hacked.

Those wrapped tokens can be depeged and when depeg occurs, if we own wrapped tokens, our capital will vanish.
Stable coin depegs are bad but wrapped token depegs can be worse. Because they might have nothing to keep the peg like stable coins.

Get profit for their exchanges is not the worst which is if they use their tokens as collateral and bet to get richer. They ignore risk like Sam Bankman-Fried and their exchanges can collapse like FTX.

Like I said, they're double counting: the same Bitcoin is counted as "crypto market cap" twice.

It's the modern equivalent of "paper gold":

I did not know that Binance has done this kind of a thing before. Segwit fee is almost twice as low as legacy fee, but Binance make it the other way. If more people have been using segwit when that was done, I think that is what they are trying to do, they know more people are using segwit and more fee the Binance will earn.

According to what I read, the coin is not just pegged in price, but collateralized, they bought bitcoin for it and they have it in their reserve. They reserve and mint the token which are altcoins. If they buy bitcoin and mint the same amount of token, that will increase bitcoin price and marketcap appropriately.

But the problem is that many people do not know the main bitcoin from the fake ones on Binance and many other exchanges, they will think they have bitcoin, not knowing they have altcoins. If anything worms happen to those BEP2 and BEP20 chain and people list their, bitcoin holders will not lose, but those that hold those altcoins that they thought are bitcoin will all lose.

I trade and I use many exchanges. Out of tens of exchanges that I have used, I still have five active ones which are Bybit, OKX, Kucoin, Binance and Huobi. I noticed how Binance manipulate to favour itself. Example is when Binance user deposit altcoin pegged with bitcoin and other coins on BEP20 chain, the confirmation is fast and you can use it to trade immediately olto open position in derivative market, unlike the main coins (not only bitcoin) which they can delay for almost 10, 20, 30 or more minutes, they do it for altcoins that can confirm almost instantly too, they delay them with many confirmations required and reaching certain confirmation before it is unlocked. The one that occurs to you people which are the fake bitcoin that you are talking about, it is more than that, but this is about bitcoin, I will not explain further. Out of all the exchanges, Binance manipulate the most and having what are centralized. It has its own stable coin which is BUSD, two chain which are BEP2 and BEP20. Traders traders just have to be wise for the wrong approach Binance is using, but the liquidity on the exchange is good. Other exchanges that I have mentioned too are good, they are my best pick before they started to make KYC compulsory one by one. This year alone, Bybit, OKX and Kucoin has made KYC mandatory.

This can't be emphasized enough!

Their made-up "wrapped" tokens even get "market cap" and with that, pretend Bitcoin's market cap is lower than it actually is. What if I take 1 Bitcoin and wrap it 1 billion times? My market cap will be $30 trillion!

My advice: avoid any exchange that feels the need to create their own "token" to increase their own profit. Just like you should avoid any exchange that overcharges you on withdrawals.

For exchanges and other places I wonder if in addition to not wanting to touch or change the code if they can't
Are they just a custom front end on a white label back end that does all the processing for a bunch of places and if THEY don't change the code there really is nothing that the people who are using it can do.

Yes, places like Binance and other large exchanges have no excuse, and we know it's all about profit.
But, some of the smaller ones? Are they doing it all themselves or are they using Dave's Exchange Back End and since I didn't update it, they are stuck.

-Dave

Yes, but it took them literally years after segwit was enabled to actually start supporting it.

Not according to https://www.binance.com/en/fee/cryptoFee. Ignoring their scam chains, the withdrawal fee for "Bitcoin" is 10,000 sats, while the withdrawal fee for "BTC(SegWit)" is 50,000 sats. As if paying 10,000 sats for a withdrawal which costs Binance 100 sats wasn't bad enough, for some reason they charge 5x more for a cheaper segwit withdrawal. Fees this high are to prevent people from withdrawing coins and therefore let Binance continue to run their fractional reserve scam. And of course as BHC points out, if you do actually withdraw your coins then >99% of the withdrawal fee goes straight in to Binance's pocket.

I guess as exchanges die, so too does their legacy code. Does anyone know if FTX and other defunct exchanges from last year allowed Segwit address withdrawal?

The good news is that as new exchanges are launched, their owners will realize that relying only on legacy addresses is a pretty bad idea, especially since it is common for some altcoins to have hard-fork upgrades once or twice a year.

Do you think it is appropriate to use Binance as an example? Binance is supporting segwit which you also talked about. There are exchanges like Bybit, Huobi Global and many other ones that you will only see accounts with legacy address. You can not also use many those exchanges as example for the first question because you can send from their legacy address to other bitcoin address like legacy, compatible segwit and native segwit. I do not know of taproot address, but you can send to other addresses.

I will say that is not laziness if an exchange only have legacy address, but allowing transfer to other addresses. But an exchange only allowed legacy address and do not allow sending to segwit, what should we call that?

The exchange that I have used before that do not allow sending to segwit is this exchange which you can not tell people to use called Yobit, the exchange may be allowing sending to segwit now, but did not allow when I tried that in the past.

As for Binance, I have been using it for over three or four years ago. If you want to withdraw, you will not see legacy or segwit, you will see bitcoin.



Binance do not discriminate if you want to send from one address to another. I do not know of taproot address. It give the option to select either Bitcoin legacy or Bitcoin segwit if you want to deposit.



The withdrawal fee for all the bitcoin addresses are the same on Binance. Not the altcoins like ERC20, BEP20 and BEP2.

Well, that's not entirely true. While I haven't actively used a legacy address for years, I still have some coins on legacy addresses in the form of old paper wallets or old encrypted cold storage wallets. There is no point moving those coins to a new segwit address just for the sake of it, when they remain perfectly safe and secure where they are.

When I finally come round to spending from those wallets, then I'll obviously direct any change to a segwit address, but in the meantime the coins can stay where they are. I'm sure there are plenty of people in similar situations with coins on old legacy wallets.

I don't think it's laziness. They simply don't care about their clients, and neither do they. Binance is charging much more than an average Legacy transaction, and they still use it. They're like charging 50k sats for Legacy and 20k for Segwit, and I see nobody quitting Binance for that reason. There's absolutely no reason to charge that much, except from the profit they make (which is about 99% of the fee).

Next time there's an empty mempool, and you notice 40 sat/vb for a Legacy transaction, be sure it's one of the prominent centralized exchanges! 

See this page about Segwit transactions for reference: Anatomy of a raw transaction, and BIP141.

The raw transaction format has changed with the addition of a witness data field and some mandatory flag bytes, which is required for constructing a transaction that sends bitcoins to (native) segwit bc1 addresses. And the old ScriptSig fields for native segwit address outputs are cleared, wiped out. Since these exchanges are constructing transactions the old way, they cannot add witness data to transactions making it impossible to send to bc1 addresses.

Nested segwit on the other hand (addresses starting with a 3) have their transaction outputs constructed by creating the witness data AND placing a standard P2SH script and signature in ScriptSig and ScriptPubKey respectively. That's how the old transaction format can still send bitcoins to nested segwit addresses even without witness data because the transaction will still be valid in the old format.

They are lazy to upgrade their wallet softwares and only do it when other exchanges, competitors do it. They upgrade when they see risk to lose customers.

Because they don't learn and completely depend on exchanges to receive and send bitcoin. They don't care to learn about Segwit address bech32 and find non custodial wallets support Bech32.

Bech32 adoption https://en.bitcoin.it/wiki/Bech32_adoption

If they can not help themselves, they can not help others and Bitcoin network, mempools.

Because the exchange or platform do not upgrade their software to support segwit.

Because of the question that you just asked and because of the wallet that still do not make segwit their default addresses. But over 95% transactions are segwit transactions.



If there are many exchanges that still support legacy and nested segwit transactions, I think most noncustodial wallets are supporting segwit addresses by now, although not all.

Why are some exchanges and some platform don't send Bitcoin from legacy to segwit wallet address, is there a cost of operation in implementing that on their exchanges? I don't know why they displayed an error when someone wants to send Bitcoin to an external wallet or send to the Bitcoin wallet address.

My second question is this, If Segwit is considered to save fees and space, why are people still using the first generational wallet address instead of segwit and also the new improved Taproot wallet address? Why are they not helping the blockchain and the cost of spending Bitcoin.