SegWit or Segregated Witness is one of the recent Bitcoin upgrades, primarily aimed at protecting against transaction malleability and decreasing transaction times, same as Bitcoin Era app. The upgrade changed Bitcoin’s transaction format and sought to speed up the validation process by storing more transactions in a block.
The Bitcoin network comprises thousands of independent computers, serving as validators for the blocks that miners create. Those computers are known as nodes, each keeping a complete record of all transactions through the network. That record is called a blockchain.
Bitcoin’s network ran smoothly in its early days, but problems surfaced as many users joined it. One of the critical issues was the slower transaction speeds caused by the large numbers of users on the network. The Bitcoin protocol stipulates miners create new blocks every ten minutes, and each block could only hold data sizes of up to 1 MB previously. That meant miners could add only a specific number of transactions to a crypto block.
The more significant number of transactions on the network frequently impacted delays in transaction processing and verification. Sometimes, it took several hours for Bitcoin users to get a confirmation for their transactions. Experts say Bitcoin transaction validation would have soon come to a halt as the cryptocurrency grew in popularity and crypto transaction volumes increased.
Bitcoin developer Pieter Wuille formulated the SegWit protocol that divides transactions into two segments. It removes the unlocking signature from the original part but keeps it as part of the blockchain. The initial segment holds the data of the sender and receiver, as the other segmented section accounts for scripts and signatures.
The SegWit protocol’s data segregation creates more space, allowing miners to add more transactions to the blockchain. However, understanding how SegWit works require looking into what goes on behind the scenes.
The Bitcoin network requires two pieces of information whenever one user sends Bitcoin to another; public and private keys. A public address is a digital signature that users exchange to send and receive Bitcoin. The wallet addresses are visible to all the Bitcoin users on the network. However, a private key is confidential and strictly used to verify that a public key belongs to the entity using it.
How SegWit Addresses Bitcoin’s Earlier Problems
SegWit is a process for changing how data is stored, enabling the Bitcoin network to run faster and more efficiently. It reduces the blockchain size limitation, one of the issues that caused the slower transaction processing speeds. It achieves that goal by segregating the transaction witness’ digital signature from the original transaction data. That reduces the size required for storing a transaction in the blockchain.
Unlike a typical Bitcoin block size limit of 1 million weight units (WU), SegWit introduced a block weight limit of 4 million. That is equivalent to a block size increase from 1MB to about 4MB. The extra data space increases Bitcoin’s transaction speeds, improving network efficiency.
Some experts have also applauded Bitcoin’s SegWit as a critical development in the network’s security. That is because it prevents transaction malleability or the ability to alter small bits of information in a block. That protects Bitcoin users from various fraudulent risks such as double-spending. Check out Crypto CFD Trader to seamlessly buy and trade Bitcoin.
Overall, Bitcoin’s SegWit attracts mixed reactions from the crypto community. However, it is a crucial upgrade that has significantly improved the Bitcoin network’s security and decreased transaction times. It gave way to the implementation of the Taproot upgrade, allowing for even much faster transaction processing speeds.