What is SegWit?
Segregated Witness (SegWit) is a protocol upgrade developed in 2015. The concept was introduced as a solution to the scalability problem that blockchain networks were and are still facing today.
On average, the Bitcoin network validates a new block every 10 minutes, each containing several transactions. As such, the block size affects the number of transactions that can be confirmed in each block. Currently, the Bitcoin blockchain is able to process around 7 transactions per second.
SegWit’s main idea is to reorganize block data in a way that signatures are no longer placed along with transaction data. In other words, the SegWit upgrade consists of segregating the witnesses (signatures) from transaction data. This allows for more transactions to be stored in a single block, and thus increases the transaction throughput of the network.
By only being able to process about 7 transactions per second, a Bitcoin transaction can sometimes take a long time to go through. That’s a lot slower when compared to conventional payment solutions and financial networks, which can process thousands of transactions per second.
SegWit was developed in 2015 by Bitcoin developer Pieter Wuille, along with other Bitcoin Core contributors. In August 2017, the SegWit upgrade was implemented as a soft fork on the Bitcoin network.
Today, there are several cryptocurrency projects using SegWit, including Bitcoin and Litecoin. The protocol upgrade brought up a number of benefits, such as improved transaction speed and block capacity. In addition, SegWit solved the so-called transaction malleability bug (discussed below).