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What is Segregated Witness (SegWit)

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Segregated Witness (Segwit) - a solution that aims to increase network scalability. It will be easier to understand this concept considering the structure of Bitcoin transaction. It consists of two parts:

  • Basic information (who senders, to whom, amount);
  • Information of the witness, which contains a special cryptographic code (signature).

The witness part was a problem for the blockchain because formally this signature can be changed already after it appeared in the block. This does not mean that BTC will not be transferred. But this complicates all new transactions. Unconfirmed transactions slow down the speed of new transactions, as they “pull” data from a previous transaction.

Therefore, it is difficult to transfer Bitcoin and it is difficult to implement large-scale updates due to the features of the current protocol. Against this, the movement for the introduction of SegWit began.

SegWit Implementation

They started talking about Bitcoin modernization back in 2012.
In August 2014, Maxwell, Adam Back, and Peter Wuille launched Blockstream, a company that investigated blockchain. The developers decided to separate the part of the data from the Basic part of the transaction. They called this feature Segregated Witness.

Segregated Witness should solve the problems of network capacity and adapt the blockchain to new realities. Segwit streamlines the transaction process and creates the conditions for the subsequent increase in block size. Here is a list of "problems" and "tasks" that SegWit should solve:

  • Removing the signature with Witness data from the block, which helps to increase its size and increase the bandwidth of the entire network;
  • The decrease in transaction size by an average of 48%;
  • Reducing the size of the blockchain, which will save disk space for full nodes (nodes);
  • It will take less time to synchronize and launch the node, and the process of checking the status of the transaction will be simplified;
  • The network can be connected to second-level protocols like the Lightning Network, and in the future, it is even possible to implement cross-chain transfers;
  • The potential introduction of instant cryptocurrency exchanges for fiat without involving exchanges and exchange services;
  • The strengthened mechanism of protection against spam attacks.

So SegWit touches on such important aspects for Bitcoin as scalability, level of protection, and interaction with new protocols.

The main contributors to the SegWit idea for all these years have been the developers of the main Bitcoin client Bitcoin Core. Later, they also started working on the new Blockstream startup, which we mentioned above. One of the products of this company is the Lightning Network protocol.

Key Benefits Of Segregated Witness

  • The implementation of Segwi significantly improves the Bitcoin network. Here are the key benefits attributed to Segregated Witness:
  • Thanks to the implementation of the new protocol, all options for changing the transaction signature by a third party is eliminated. This in turn simplifies the development of new smart contracts, such as those used by the Lightning Network.
  • The transaction size becomes smaller, while the amount of data transferred during the transaction does not change. This is made possible by moving the data signature. As a result of this, blocks in a Segwit network has a volume of 1.7 MB -2.0 MB. This will significantly increase the blockchain throughput.
  • The procedure for calculating commission fees will be changed, which will lead to their reduction. That is, transactions will become cheaper, and the "margin" from them will be determined immediately.
    With the adoption of Segwit, the implementation of new software forks will become much easier. This will allow you to implement new ideas to improve security. For example, change ECDSA signatures to a more reliable Schnorr standard.
  • Users that update protocol work with lower fees.

We can say that Segwit is improving Bitcoin ecosystem here and now, as well as create a bridgehead for further development. This, in turn, can seriously affect the course of the world's most popular cryptocurrency.

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