What is Segregated Witness?

1. What is Segregated Witness?

Segregated Witness, or SegWit, is an implemented protocol update proposed by the Bitcoin Core development team. The purpose of this proposal is to optimize block size, which in the long run will solve the issues of bitcoin network scalability, block overflow with transactions, transaction confirmation speed and lower commissions. In simple words, SegWit allows for increased blockchain efficiency without increasing block size.

2. What is softfork?

A softfork (“soft fork”) is a change in the rules by which a block goes through validation (authentication) in the blockchain. Softforcing involves changes in the code that do not affect the core of the software. In contrast to softforcing, hardforcing is a more radical and quicker solution, but it can also endanger the entire bitcoin protocol if a mistake is made in its implementation. For example, the solution proposed by the developers of Bitcoin Unlimited is a hardfork of the bitcoin network. You can read more about forks and the differences between hardforks and softforks here.

3. What will SegWit do in the long run?

First of all, Segregated Witness solves the problem of scalability of bitcoin network. The solution will optimize the structure of the transaction block, as it gives the ability to separate transaction signatures from the process of transmitting them. As a result, transactions will take up less space and blocks will become correspondingly larger. The activation of SegWit also eliminates the problem of transaction malleability, creating conditions for higher confirmation rates (including by bundling Segregated Witness with another solution called Lightning Network).

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4. What are the benefits of SegWit?

The main advantage of Segregated Witness is that excluding signatures from a 1Mb block can effectively increase the size of a bitcoin block. This means that more transactions can be written into each block, or in other words, increase the throughput of the blockchain. In doing so, the solution is feasible without violating existing consensus rules.

To solve the scalability problem, Segregated Witness involves extracting the signature of a transaction and placing it in a separate data structure. When a signature is removed from a transaction, the transaction size is reduced. Consequently, each transaction is reduced by about 47%. Thus, a block, without changing its size, will be able to hold almost twice as many transactions.

SegWit will also benefit holders of “full nodes” because it can reduce the amount of data required to be stored on hard drives. In other words, Segregated Witness will reduce the requirements to run a full node and the time it takes to sync with the network.

5. What does it take to implement Segregated Witness?

In order to activate the solution on the bitcoin network, support from 95% of the miners is required. More specifically, once the activation threshold is reached, at least 95% of blocks must be mined by miners signaling support for Segregated Witness within one period of complexity of 2016 blocks (approximately two weeks). The Bitcoin Core 0.13.1 client with the SegWit solution enabled was released on October 27, 2016.

6. How strong is support for SegWit in the bitcoin community?

Recently, support for Segregated Witness in the bitcoin community has been growing. This is largely due to the high level of trust in the Bitcoin Core team and the recently discovered bugs in Bitcoin Unlimited software. There are various services to see which companies support Segregated Witness, such as Coin Dance.

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7. What other cryptocurrencies are targeting SegWit?

In April 2017, the Segwit protocol was activated in the Litecoin network. There are other, lesser-known digital currencies that have also indicated their commitment to Segregated Witness.

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