All the cryptocurrencies available in the market run on a standard set of protocols. The protocol guides how a cryptocurrency needs to be worked. However, the protocol needs to be changed when crypto needs any improvement or update. Now, Segwit is also an update made in the Bitcoin protocol in 2017.
In 2015, Pieter Wuille first presented the idea of Sigwit. He is a Bitcoin developer and co-founder of Blockstream (a software company that provides digital security in financial services).
According to Wuille, SegWit was the solution to the issue of transaction malleability in the Bitcoin protocol. His proposal was accepted after almost two years, and segwit was activated on August 23, 2017. Segwit was also updated in the Litecoin protocol after some time as it shares the common problem of transaction malleability with the bitcoin protocol.
SegWit is an acronym for segregated witness. It refers to a change in the Bitcoin transaction format. SegWit allows the block size limit on a blockchain to be expanded by removing signature data from bitcoin transactions. When parts of a transaction are removed from blocks, space or capacity is freed up for more transactions to be added to the chain. Its goal was to reduce transaction latency and protect against transaction malleability by increasing block capacity. The term “transaction malleability” refers to the possibility of changing small parts of transaction data, invalidating new cryptocurrency blocks.
Storing more transactions in a block was also meant to speed up the validation process. Segwit also led to the implementation of Taproot, another upgrade to Bitcoin that allows even faster validation of transactions.
A SegWit transaction is divided into two parts:
Pieter Wuille introduced SegWit to address the issues surrounding transaction malleability. However, SegWit outperformed expectations regarding transaction size, malleability, and transaction fee. Bitcoin is a relatively new technology. Although it is the world’s largest cryptocurrency, some wonder if it’s still the greatest, as other blockchain initiatives continue to introduce advanced crypto technology. Some consider SegWit Bitcoin to be a good thing for the network. On the other hand, others see it as a representation of Bitcoin’s limitations.
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