Bitcoin SegWit is a technical update to the Bitcoin protocol. The main goal of SegWit was to fix some of the issues with Bitcoin such as transaction malleability and capacity. On August 1st 2017, SegWit was activated on the Bitcoin network and users are able to take advantage of its benefits. In this article, we will explain what SegWit is and how it works. We will also discuss some of the benefits that SegWit brings to the bitcoin network.
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What SegWit means for Bitcoin?
SegWit is an upgrade to the Bitcoin protocol that was implemented on August 2017. It includes a number of improvements for blockchain efficiency, fee reduction and transaction malleability fixes. The most important changes are:
- Compressed public keys (32 bytes instead of 64) to reduce size of transactions by 50%. This means more transactions can be fit into a block, reducing the fees for each transaction.
- Removal of signature data from transactions, meaning that only the sender and receiver’s addresses are stored on the blockchain. This makes it more difficult to tamper with or alter a transaction.
- Fixing of transaction malleability which allows SegWit transactions to be confirmed more quickly.
What are the benefits of SegWit?
SegWit brings a number of benefits to the Bitcoin network, including:
- Increased capacity – Transactions that use SegWit are taking up less space on the blockchain, meaning that a larger number of transactions can be processed at once. This will help to reduce congestion and lower fees.
- Faster confirmations – SegWit transactions are confirmed more quickly than traditional Bitcoin transactions, due to the fixes for transaction malleability.
- Reduced fees – As well as taking up less space on the blockchain, segregated witness transactions also typically have lower fees than non-SegWit transactions. This means Bitcoin’s blockchain can handle more transactions.
How can I use SegWit?
In order to take advantage of SegWit, you will need a wallet that supports it. Most Bitcoin wallets now support SegWit transactions, but you may have to enable them in your settings first. You can find out how to do this on the official website for your bitcoin wallet provider or by searching Google for “How To SegWit Your Wallet”.
Once SegWit is enabled, you will be able to create SegWit transactions by selecting the “SegWit” option in your wallet. These transactions will then be confirmed more quickly and at a lower cost than traditional Bitcoin transactions.
If you are a developer, there are also a number of ways that you can integrate SegWit into your projects to make them more efficient and reduce costs.
- You can use SegWit addresses in place of traditional bitcoin addresses, SegWit transactions will be cheaper and faster than non SegWit transactions.
- You can create a segnet or testnet for testing purposes before deploying SegWit transactions on the mainnet.
- You can use SegWit scripts to create more complex bitcoin transactions.
Is SegWit secure?
SegWit is a soft fork, meaning that it can be implemented without causing any disruption to the bitcoin network or existing transactions. It is also backwards compatible with older versions of bitcoin software as SegWit transaction data will be ignored by non SegWit nodes on the network. This means that segregated witness transactions are just as secure as traditional bitcoin transactions.
How are segregated witness and transaction malleability connected?
Transaction malleability is a bug in the bitcoin software that allows an attacker to change the transaction ID of SegWit transactions before they have been confirmed on the blockchain. This can make SegWit transactions take much longer than expected, or not confirm at all if they are double spent after being modified by an attacker. SegWit fixed transaction malleability by removing the signature data from transactions, making them less vulnerable to malleability attacks.
Does SegWit lower Bitcoin transaction fees?
SegWit does not directly lower transaction fees, but it does make SegWit transactions cheaper than non SegWit transactions. This is because SegWit transactions take up less space on the blockchain, meaning that miners can process more of them at once and still earn the same amount of bitcoin rewards for their efforts. As segregated witness transactions take up less space, SegWit transaction fees will typically be lower than a traditional transaction fee.
Can a standard Bitcoin transaction be sent to a segregated witness address?
Yes, SegWit is backwards compatible with traditional bitcoin addresses. SegWit transactions can be sent to any valid bitcoin address without causing an error on the network or your wallet provider’s servers. However segregated witness transactions will only take up less space on the blockchain if they are sent from SegWit-enabled wallets using SegWit addresses.
What is the SegWit activation threshold?
The SegWit activation threshold is the number of bitcoin nodes that need to upgrade to SegWit in order for SegWit Bitcoin improvement proposal to be activated on the network. As enough of the Bitcoin community and Bitcoin mining pools signaled for SegWit activation, it has been activated across the Bitcoin blockchain. Bitcoin Cash which is a popular fork of the Bitcoin Blockchain, does not incorporate segregated witness.
How common is SegWit adoption?
SegWit adoption has been steadily increasing since SegWit was activated on the network in August 2017. An estimated 50% of Bitcoin transactions are now SegWit, with this percentage expected to increase over time as SegWit is further adopted by users and developers.
