Segregated Witness (SegWit) is a Bitcoin network upgrade that increases block size limits by separating signature data from transaction data, improving scalability and security.
Understanding Segregated Witness (SegWit)
Segregated Witness, commonly known as SegWit, is a protocol upgrade that has significantly improved the Bitcoin network. It addresses two major issues: scalability and security. Let’s explore how SegWit achieves this.
What is Segregated Witness (Segwit)?
Introduced by Peter Wuille in 2015 and activated in 2017, SegWit is a soft fork—compatible with previous Bitcoin protocols. It separates signature data from transaction data within the blockchain. This separation leads to increased block capacity and enhanced security.
How SegWit Works
- SegWit reallocates signature data (the witness) from the main block structure to a separate structure.
- It permits nodes with the upgrade to process transactions without the witness data initially, optimizing validation times.
- By detaching the witness data, it effectively increases the block size limit. More transactions fit into a block, reducing fees and speeding up processing.
- SegWit also resolves the transaction malleability issue, preventing manipulation of transaction IDs.
- For SegWit’s advantages, users must adopt SegWit addresses starting with ‘3’ or ‘bc1’.
SegWit’s implementation allows for more complex transaction types and paves the way for second-layer solutions like the Lightning Network. These enhancements have made Bitcoin more robust, efficient, and ready for increased adoption.