(dis)Advantages of migrating funds to segwit?

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For offline pre-segwit wallets (addresses starting with 1) what might be the advantages of migrating or not migrating to segwit (addresses starting with 3)?

Even though segwit miner fees are or will be allegedly lower I didn't find any conclusive data on exactly how much lower they are at the moment, therefore I am assuming that keeping coins in 'legacy' format would still be cheaper in terms of future spending since the miner fee for moving to a segwit address would still be significantly higher than any future potential gains. Is this correct? Would this still be true if the coins are going to be spent e.g. in one year, two, or five?

Among current downsides to migrating to segwit wallets I see incomplete support in existing apps, also eg Mycelium won't work with a ledger nano if it is configured as segwit. This subreddit suggests to go with segwit.

Can segwit be considered ready for use?

ccpizza

Posted 2017-12-02T23:26:38.950

Reputation: 227

1Note that there are still a couple "gotchas" when dealing with SegWit. Eg: Trezor (with SegWit wallet setup) will not work with Mycelium for example because they have no SegWit support. The situation with newer Bech32 "native" segwit addresses (beginning with bc1..) is much worse... most wallets and block explorers will not understand these addresses at all. – Jonathan Cross – 2017-12-03T20:05:53.770

@JonathanCross: same issue in mycelium with ledger nano, as stated in the original question. i emailed them about the problem at the email address listed in google play store and received... a bounced email. their lead dev quit, and it's not clear where they are heading. – ccpizza – 2017-12-04T04:56:50.333

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the ticket regarding segwit support in Mycelium: https://github.com/mycelium-com/wallet-android/issues/379

– ccpizza – 2017-12-04T10:18:24.193

electrum works with ledger/trezor in segwit mode: File > New/Restore > Standard Wallet > Use a hardware device > set derivation to m/49'/0'/0' instead of the default value. – ccpizza – 2017-12-14T10:52:45.630

Answers

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I am assuming that keeping coins in 'legacy' format would still be cheaper in terms of future spending since the miner fee for moving to a segwit address would still be significantly higher than any future potential gains. Is this correct?

You still need to move the coins eventually, and the potential gains will be nullified by the fact that you still have to pay BTC in order to move the coins. The amount you pay will probably still be the same amount whether you move the coins now or move them later.

You can also just be very cheap on your transaction fees. Just pay a very low fee rate. Your transaction will take a long time to confirm, but if it's just for cold storage, there's nothing to worry about there.

Among current downsides to migrating to segwit wallets I see incomplete support in existing apps, eg Mycelium won't work with a ledger nano/trezor if it is configured as segwit.

If you aren't planning on spending your Bitcoin, then that doesn't matter. Just use software that supports segwit. If you want to be compatible with non-segwit wallets, use a P2SH nested segwit address.

Can segwit be considered ready for use?

Yes.

Andrew Chow

Posted 2017-12-02T23:26:38.950

Reputation: 40 910

1by saying The amount you pay will be the same whether you move the coins now or move them later your probably mean the amount in BTC, not in fiat, right? Compared to a year ago fees have increased significantly, including as BTC amounts, so unless there will be some new BIPs applied it is likely fees will keep increasing, no? – ccpizza – 2017-12-03T22:40:46.810

Yes, that is the amount in BTC. Again, if you don't want the transaction to confirm quickly (which is applicable when you are moving cold storage coins), then paying a low fee is fine, and that low fee will be the same now versus in the future. There also is no guarantee that fees will go up or down in the future. Just because it happened in the past does not mean that it will continue in the future. – Andrew Chow – 2017-12-03T22:57:34.913

again, you are talking about the fee amount in bitcoin, the amount in fiat can and will be quite different – ccpizza – 2017-12-05T07:16:17.583

Of course I am talking about the amount in Bitcoin. All that matters in a Bitcoin transactions are the Bitcoin amounts. The Bitcoin network does not care about the fiat values. Trying to give the values in fiat values is impossible as that requires predicting the future to know what the Bitcoin to fiat exchange rate is going to be. – Andrew Chow – 2017-12-05T16:12:20.690

1❗️❗️❗️WARNING!!! ❗️❗️❗️: Regarding: You can also just be very cheap on your transaction fees — this is dangerous because your transactions can be stuck in unconfirmed state for days, weeks, months or forever! – ccpizza – 2017-12-14T07:59:06.813

If a transaction is unconfirmed for a long period of time, it is fairly easy to create a double spend with a higher transaction fee that will confirm. It is unlikely that a transaction that is unconfirmed for a long time will be remembered by nodes so the double spend will go through. By "a long period of time", I mean a few days. – Andrew Chow – 2017-12-14T08:03:55.720

this will require recreating the original wallet without the unconfirmed transaction, and if the wallet is an external cloud service that will require emptying the wallet which may not be possible when unconfirmed transactions are pending; so it's not really fairly easy. – ccpizza – 2017-12-14T08:08:39.107

1There is no need to empty the wallet in order to do anything related to this. Many online wallets will just forget that an unconfirmed transaction even existed if it has been unconfirmed for a long time. So after that happens, you can remake the transaction but with a higher transaction fee. Furthermore, many online wallet services are using BIP 32 and BIP 39 mnemonics, so you can restore your wallet to some other wallet which allows you to remove the unconfirmed transaction or does not even know about it in the first place. You can then make the double spend from there. – Andrew Chow – 2017-12-14T16:22:07.957

Asked: 2017-12-02T23:26:38.950

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Active: 2017-12-06T17:53:02.903