What is Segregated Witness?

We heard a lot about Segregated Witness or SegWit a few years back. What is Segregated Witness? It is a soft fork method that removes signature data from transactions to increase the blocks’ capacity (size). Simply put, a soft fork is simply a backward-compatible method of upgrading the blockchain.

en.bitcoinwiki.org describes Segregated Witness this way: (a bit techie I agree:)

Segregated Witness (abbreviated as SegWit) is an implemented protocol upgrade intended to provide protection from transaction malleability and increase block capacity. SegWit defines a new structure called a witness that is committed to blocks separately from the transaction Merkle tree. This structure contains data required to check transaction validity but is not required to determine transaction effects. In particular, signatures and redeem scripts are moved into this new structure, which does not count towards the traditional 1 MB block size limit.

Instead, a new weight parameter is defined, and blocks are allowed to have at most 4 million weight units (WU). A byte in the original 1 MB zone of the block weighs 4 WU, but a byte in a witness structure only weighs 1 WU, allowing blocks that are technically larger than 1 MB without a hard forking change. After the successful activations of OP_CLTV and OP_CSV, SegWit was the last protocol change needed to make the Lightning Network safe to deploy on the Bitcoin network.

Because the witness structure contains script versioning, it is also possible to make changes to or introduce new opcodes to SegWit scripts that would have originally required a hard fork to function without SegWit.

learnmeabitcoin.com/faq/segregated-witness explains Segregated Witness in simpler language:

BIP 141: Segregated Witness (21 December 2015). What is Segregated WitnessSegregated Witness is a proposal to change the structure of bitcoin transaction data. The main reason for doing this is to fix the problem of transaction malleability. However, this change also allows for other benefits, such as increasing the number of transactions on a blockchain”

Unsure what a soft fork is? Read my Blog titled “What is Forking?” on the Compumatrix WordPress Site.

To first understand how Segregated Witness is used to increase the capacity of the blockchain, it is essential to know how a transaction works.

How a transaction works
Transactions consist of inputs and outputs. Inputs are the culmination of previous transactions. These previous transactions give the existing account a balance used to begin new transactions. For example, in the transaction, “Alice sends 10 Bitcoins to Bob”; for this to happen, the 10 Bitcoins she is sending to Bob is the input. On the other hand, the output is the number of Bitcoins Bob would have once the transaction has completed.

Transactions made of signature data and used by senders serves to prove that the senders are the rightful owners of the account they are sending funds from in the first place. Signature data make up about 65% of Bitcoin transactions.

Bitcoin’s scaling issue

More and more people now use Bitcoin regularly. Therefore a more significant number of transactions need to be processed to be added first to blocks, then to the blockchain. This processing is known as the mining process. If you’re unsure about the mining process, check out my Blog titled “Bitcoin Mining in Simple Terms,” on the Compumatrix WordPress site.

Transactions are added to the blockchain in blocks; each block has a maximum size limit of 1 MB. This 1 MB limit created a scaling issue (scaling means room to grow basically). As more people used Bitcoin and the number of transactions increased, the size limit of a block at 1 MB is shown to be unable to handle increased volume in transactions. This caused some users to wait hours and even days to have their transactions validated and added to the blockchain.

This bottleneck (slowdown) is known as a scalability issue. The issue is that the Bitcoin network was unable to scale (grow) with the increasing number of users. And this is what Segregated Witness brought about as a solution to this scaling problem.

Segregated Witness
Remember, signature data accounts for 65% of a transaction, and a block is simply a bundle of transactions. So, by moving signature data into an extended block, freed up space is created in the original block. Extended blocks run parallel to the original blocks and are known as “side-blocks.” In this way, space is freed up in the original blocks allowing for more transactions added. This free space results in increasing the block size from 1 MB to 4 MB.

About the author

Gail holds one of the most challenging role in the Compumatrix Leadership: Membership. She ensures that that members and potential members enjoy the benefits of being part of the Compumatrix community.

Comments

  1. Wow Gail, yes that was a bit techie. Now I realize I really need to be at the level of the lessons you have outlined for your grandchildren….I would fit right in there! This knowledge is a big step right over the basics which aren’t really secure in my mind yet… though when we start using our compumatrix business and everything is opened up, then I’m sure we will learn by doing. The good ole 4H Motto which worked well for my child and also for me!

  2. holy cow Gail — techie stuff beyond my comprehension — however after reading this a couple times and putting this info with so much more of the blogs here already it is actually fun to think that Hey maybe i am learning more and more about this Crypto world — hope so anyways — and yes Thank you for your expertise and willingness to help us less talented — great read G — rj

  3. Gail, I am so glad you know all you know about the crypto movement and can explain it, so it is understandable to laypeople. My conception of the blockchain is becoming clearer and clearer. It is little by little, line upon line, that we learn what and how it will take us into the twenty-first century. I am happy my mind is waking up to ingest new knowledge!!!

  4. Gail, I admire you for your ability to understand all this techie stuff and the inner workings of how crypto technology and transactions work. I love technology and I focus more on how to implement it in my life and what I will need to know moving forward. One thing for sure, the world of crypto is constantly changing and growing and requires that we keep informed and up to date.

  5. Knowledge is good I can actually answer some questions now some friends have been asking me about how it all works. Not sure if they will understand it yet but at least I can explain and show this blog to them. This blog site is fantastic there is so much information in so many areas of our business it is a great tool indeed.

  6. Great post Gail. I have used the Seg-Wit on transfer LTC to a Nano. It seems that the transaction is a lot faster than using Legacy address. On the Nano it has 2 separate wallets, one for Seg-Wit transactions and one for the Legacy transactions. Just sharing this information in case you are sending BTC or any other coins to a Ledger Nano s. Look forward to using the Seg-Wit address in the future.

  7. This is highly technical and it would take lots and lots of reading to understand it perfectly. I did read about Seg-Wit a number of times but never did understand much of it. Seems to work faster and better. Something more to learn and apply in sending coins to Nano. Making notes and taking time to learn more about using this option of transferring funds.

  8. SegWit makes sense as Bitcoin users growth rate is increasing everyday. While many new modern mining operations are being built today, the system needs to be able to expand and streamlined. Going from 1MB to 4MB in a single block speeds up the system.

    We are all going to have to learn the inner workings of this program as well as others. Over time hopefully we’ll get it. Lots of “techie” info and verbiage here that we will have to learn and understand.

  9. I love the concept of Segregated Witness because it speeds up the process of transactions! In my opinion, as long as it is still safe and reliable, quicker transactions are always better because of the growing number of cryptocurrency users. Because Bitcoin was the first cryptocurrency to ever exist, I think its standard way of doing transactions will always exist, but I think coming up with alternative solutions never hurt anyone.

  10. It is comforting to know that transactions go through the SEGWIT process. These steps provide verification. This benefits both the sender and the receiver. I imagine that a lot more people are going to be needed to assist in this verification process. I have actually wondered about how you can become a part of this verification process.

  11. Gail, YOU ARE A SMART LADY! Your intelligence is evidence in your blogs and Thank you so much for sharing valuable information. I have listed my favorite blogs on a note pad and logged them according to categories (marketing,blockchain,Compumatrix,Bitcoin) so that I can return and reread often. This Blog “What is Segregated Witness” is a bit complicated, however I use the link you provided learnmeabitcoin.com/faq/segregated-witness and will study that.These Blogs are by far one of the BEST learning tools offered by Compumatrix

  12. This blogs is enlightening to me. It certainly simplified the transaction process so that I could understand it. I had always wondered what segwit was. Now I have a better comprehension of what it mean. It is a very important upgrade to the bitcoin network. I remember the times when transactions took hours to be completed. Segwit has definitely sped up the transaction time.

  13. Ok for a common person who just started using bitcoin and wants to set up a wallet that is 100% SEGWIT compliant wallet, then one must need to do some more research on getting one. most of them are supported in hardware versions which costs money to get one.
    1. Trezor
    2. Nano ledger(you need to setup Segwit instead of legacy ledger)
    and few more.
    I found green address dot IT, Italian based company that supports Segwit transaction.
    samurai wallet app for mobile that supports Segwit transaction.

  14. My goodness Gail that is great information and yes very techie. I agree with the response above your grandkids will be so lucky to have you. I know I feel like this stuff is way over my head sometimes, but you explain things very well. Thank you for this because you broke this down so that it’s a lot easier to understand. I’m glad Segwit is part of the system, the verification is very important. Agreed there too. Everyone is on their own learning curve, but I agree when we are able to start really doing things it will blossom like a beautiful flower.

  15. When I was a weee little girl many moons ago I use to play with pretty little wooden colorful blocks .. Who would of thought now at my age I would be playing with blocks again on the crypto side of things , a whole new way of playing and learning . Oh yes a lot to learn..but interesting knowing that after awhile it really will sink in and will be easier as time goes on.
    Such fun , Yes it is fun to me. and the end results of what I learned , will be Oh so rewarding.

  16. At Gail, awesome lesson. After going through the Segregated Witness blog. I asked myself whether am getting this concept of Cryptocurrency? Big task ahead. Am so interested with the inputs and outputs. That, input is the total amount of Bitcoin that’s being sent and output is the total amount that is received at other end. And, the whole process is being enhanced by the SegWit. Which enables the Bitcoin network to run faster and more efficiently.

  17. Thank you for the post. I’ve heard a lot about SegWit and different forks cryptocurrencies undergo but never really got into it deeper. But after reading this article I now better understand what this is all about. And next time we’ll have bitcoin or other crypto soft or hard forks I’ll know what’s going on.

  18. Gail, one can only hope to have or acquire your technical knowledge of the crypto space. This blog help me put a few things in context. But it’s still a little bit of a grasp at the level of block-chain logistics and mining. Defi and the inner workings of blockchain is my current area of research and focus. Thanks again for the education.

  19. That is the best description that I have seen on SegWit! Yes, part of it was very techie, yet all together, it made sense to me. It was very understandable. Thank you for posting this, Gail. I’ve read about Segregated Witness before, but that was a long time ago. This article cleared up everything for me. It was a perfect refresher.

    Now I understand it in layman terms. It is a soft fork that creates a cooperative side chain that runs parallel to the main blockchain. That effectively allows a 1MB block to handle 4MB of information so the blockchain can scale up and manage an increased number of transactions. Cool!!!

  20. The term Segregated Witness or Segwit goes into my techie word dictionary.
    It is a useful soft fork to help keep off workload on the blockchain and help in the scalability of numbers of the transaction.
    The idea is for the blockchain to run smoother and faster in the verification as the number of transactions increases.

  21. few months back did not really even come close to grasping some of the importances of this or that in the blockchain or dex or ??? but after reading and researching am starting to really get a grasp and understanding that soft fork is integral in the overall operation — just really appreciate how much great info is available here —

  22. this is such a great re-reading and Seg-Wit being a soft fork to say in understandable terms — it is an absolute in the world of Crypto and Dex and putting this blog posting with others I have read over last couple months –it just fits into the overall process — I am not a teacher by any stretch — but there are some here that seriously are legit in their ability to teach us less schooled —

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