SegWit Finally Arrives For Bitcoin Core

The bitcoin core developers finally released the new and the most awaited bitcoin core version which also renders support for Segregated Witness or “SegWit.” Bitcoin Core 0.13.1 went live on October 26, 2016 and within seven days post its release, more than 15% bitcoin nodes have been upgraded to this new version. Compared to all the previous versions, it is said to the most crucial update as it solves some of the major issues prevailing in bitcoin core for a very long time. All thanks to the SegWit support that comes along. SegWit solves some of the major issues in bitcoin core network such as limited storage capacity and transaction malleability. It also increases the block size from 1 to 2 MB. However, the block size may vary depending on the type of transactions being carried out in the network.

Also read Electrum Wallet To Support SegWit In The Next Release.

How Does It Work?

The word “Segregated Witness” itself says it all. The term SegWit is all about the segregation of transaction signatures to allow more transactions per block. For a bitcoin transaction to take place, three main entities are required viz. Sender, Receiver and a Transaction Signature. The transaction signature is also called the “witness” as it validates each transaction by verifying if the sender has the right to send any BTC amount to the receiver or not.

By segregating the witness, you’re just separating the transaction signature (witness) from a transaction thereby reducing the transaction size. Instead of including the transaction signature in the ordinary transaction process, it is sent directly to the receiver. In this way more number of transactions can take place in each block since the witnesses or the signatures are placed outside the traditional block structure.  

Major Benefits of SegWit

Upon its activation on the bitcoin core network, SegWit will provide some immediate benefits to the bitcoin wallet users. Some of these benefits are listed below.

• Increased Block Capacity: SegWit allows each block to have more number of transactions by reducing the transaction size. This is because the signatures are not included in the transactional data. They are sent directly instead.  

• Reduced Transaction Malleability: Since the transaction signatures are not sent along with the transactional data, so the transaction generating software doesn’t need to refer to the signatures. This further helps in reducing the transaction malleability issues persisting in the bitcoin core network.

• Increased MultiSig Protection: The multisig protection has been increased from 80 bits to 128 bits by SegWit which means the security has been enhanced by up to 280 trillion times.

For all one knows, SegWit hasn’t been activated on the bitcoin network just yet but it’s all set and will be activated soon. The bitcoin core team is about to start the miner signalling on proposed SegWit soft fork within the next few days. Once the SegWit activation takes place, the bitcoin core wallet users would leverage the benefits of increased network capacity. It’s just that their wallet must be upgraded to bitcoin core 0.13.1.