At a consensus in the year 2017, many titans in the bitcoin community came together to agree a scaling solution for Bitcoin. Even back then, scaling Bitcoin was becoming a challenge. Network was slow and fees was climbing.
They came up to a solution called Segregated Witness also known as SegWit, which would increase the block size limits. And this is an important point, because block size limits was the point of contention that led to the BitcoinCash split.
What is Segwit?
SegWit is a space saving initiative to free up storage on Bitcoin Blocks among other things. All of the data that is related to the signature of the transaction is removed. The hope was that this freeing up of space on blocks could mean more transactions per block.
What was noticed about the manner in which the signature data was stored is that signatures take up about 60% of the space but are only ever really needed at the time of validation of the block.
The idea was therefore to separate these unlocking codes from the transaction in a segregated witness.
What are the importance of SegWit?
• It fixes transaction malleability
The signing data is not included in the transaction data so no node can alter the transaction ID, which makes the transaction reliable. In addition, it will also benefit all of those users who are spending unconfirmed transactions.
• Increased Security for Multisig Transactions
Script payments are hashed with a 256-bit SHA256 hashing algorithm. Therefore, chances of a collision from a brute force attack are dramatically reduced for multisig. Most importantly, it would benefit anyone paying via multisig or smart contract.
• Linear Scaling of SigHas Operations
Current protocol has the amount of data that has to be hashed for a transaction. SegWit is able to resolve the doubling size of transactions by changing the calculation of the transaction hash for the signature, which means the verification time is a linear function. This will allow for much larger transaction and will make scaling block size safer.
For sure numbers of parties celebrated this important milestone in the Bitcoin journey. Indeed, many who had been waiting for the moment were excited about the implications of eventually Lightning Network implementation.
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