SegWit – Segregated Witness

A soft fork of the bitcoin blockchain on August 23rd, 2017 intended to fix the transaction malleability bug in bitcoin’s code base. The bug was a concern because it allowed anyone to modify transaction ID data.

The SegWit fork eliminated the issue by removing signature, also referred to as witness, data from blocks and stored it separately on the blockchain outside of the blocks themselves.

What originally was thought of as a secondary benefit, more space in blocks from the removal of witness data. Actually became the prime benefit as bitcoin’s block size became a contentious issue.

Implementing SegWit was viewed as a compromise. A way to increase the amount of transactions that could be included in blocks without changing the actual 1 MB size of the blocks themselves.

This compromise was not acceptable to everyone in the community though. Bitcoin cash eventually forked from the network anyway to implement an 8 MB block size.

The SegWit enhancement was also needed to enable future developments on Bitcoin’s road map. Critical items like the Lightning Network, other Layer 2 scaling solutions, and smart contracts.

Further Reading SegWit

Bitcoin Block Size Debate Wars Explained