SegWit (or segregated witness) is a new technology that was just implemented on the Bitcoin Blockchain. It has been in use on the LiteCoin blockchain since May. Segregated Witness, although it has been a part of public discourse for a while now, may not be something you know.
SegWit, in essence, is a storage-saving initiative for Bitcoin Blocks. The data related to each block is stored in the SegWit. Signature This is done by removing the entire transaction. It was hoped that by reducing the space available on blocks, more transactions could be made per block.
SegWit was first proposed in October 2016. This was the culmination of a long-term discussion at the Bitcoin Scaling Conference held in Hong Kong. Pieter Wuille was a part of the Bitcoin team when he first proposed this idea.
Technical explanation of segregated witness
This explanation will be based on the assumption that you are familiar with Bitcoin blocks, mining and other basic concepts. Each Bitcoin transaction contains a scriptSig. In every Bitcoin transaction, there are two scriptSig and one scriptPubKey.
The signature data took up 60% of space, but was only needed when validating the block. It was decided to keep these codes separate from the block in order to avoid confusion. Segregated Witness.
This segment of the transaction that is segregated will not be hashed along with other transactional data. This new Bitcoin structure can be implemented as a “soft fork” and is still backward compatible. Segregated Witness enabled transactions do not require all miners to be capable of validating them. For it to be effective, there must at least 95 % of miner They must show their support.
The Benefits
Bitcoin transactions have been taking longer than expected. It is due to the usual capacity restrictions that are impacting the speed. This has led to a disagreement over the block size.
By separating the signatures as segregated witnesses, however, you can save space and process more transactions per block. The Segregated witness proposal has a few other advantages.
Fixed Transactional Malleability
When a transaction ID is malleable, it means that the information in the unlocking codes can be altered to change a transaction’s identity. When you send a network transaction, another node can change the transaction ID. The users that track their transactions can find this annoying.
Segwit doesn’t include signing data with the transaction, and so the ID of the transaction cannot be altered by any node. It will also make transactions more trustworthy. This will benefit those who spend money on unconfirmed purchases. This is important because it lays the foundation for Lightning Network.
Upgraded Multisig security
P2SH, which is the current protocol used for Multi Signature transactions uses a hashing function of 160 bits. Using extremely powerful computer resources an attacker could attempt to find "collision" There is a difference between an address that can be used as part of the multisignature script, and one which transfers all funds.
SegWit hashes script payments using a 256 bit SHA256 algorithm. Multisig payment collisions are greatly reduced by this. Anyone who uses smart contracts and multisig to pay will also benefit from this.
The linear scaling of SigHash Operations
Current protocol defines the hashing of the data for a particular transaction as being a quadratic operation. When the size and complexity of a transaction are doubled, the hashing operations for signatures also have to be twice as large.
SegWit resolves this issue by altering the computation of the transaction hash used for the signature, so that every byte only has to have its data hashed one time. The verification time will be linear. The scaling of block size will become safer. This allows for larger transactions, such as those paid to crowdfunders and miners.
Looking Forward
SegWit became official on the Bitcoin network, on August 23, 2017, after achieving the required 95% of consensus. A number of events were held to mark this significant milestone on the Bitcoin journey. Many of the people who had waited for this moment were very excited by the potential of Lightning Network.
You can track adoption of SegWit on websites such as segwit.party.