Let’s talk about the most important election in the bitcoin world!
Segwit is one of the most often discussed topic within the bitcoin community in the last few weeks and probably will be for a couple more. Recently Bitcoin Core 0.13.1 was released which enables segwit introduced in version 0.13 so it’s about time to explain what segwit is.
Segwit stands for “segregated witness” and it should be understood as separation of signatures from the rest of transaction. Classic bitcoin transaction have inputs and outputs. To verify if owner can spend their bitcoins we use a digital signature — the so-called witness. Nowadays a witnesses are carried with inputs as a part of transaction. The idea behind segregated witness is to simply separate signatures from transactions.
WHY IT’S SO IMPORTANT
Introduction of segregated witness brings a lot of improvements to Bitcoin. Some of them are:
MORE TRANSACTIONS WILL FIT INTO 1MB BLOCK
If signatures are kept separately it means that they don’t count into transaction size. By making transactions smaller, we can achieve better throughput of the network without increasing block size, which requires hard-fork. Estimates says that capacity of new blocks will be equivalent to 1.7MB of non-segwit block.
FIXES TRANSACTION MALLEABILITY PROBLEM
Right now some bits of information in an unconfirmed transaction can be modified in a way that doesn’t change any meaningful details like amount or recipients of the transaction, but it does change txid. It’s important mainly for developers working on wallets and people spending unconfirmed outputs. Segwit eliminates this problem making transaction identifier immutable.
INCREASED SECURITY OF MULTISIG
Multisig transactions will use stronger 256-bit SHA256 hashes instead 160-bit HASH160 which becomes less secure as we have access to faster hardware.
If you want to read more about benefits of segwit I recommend great article on Bitcoin Core Blog https://bitcoincore.org/en/2016/01/26/segwit-benefits/
WHEN SEGWIT WILL GO LIVE?
Since version 0.13.1 was released at the end of October, now we are waiting for miners to upgrade and vote for segwit softfork. First voting will start November 15 and segwit will be activated if miners responsible for at least 95% of computational power of the Bitcoin network will aggree to new rules. However it probably wouldn’t happen so quickly, because some people, like major Chinese mining pool ViaBTC are still strongly against segwit.
Now the big question is whether segwit will be voted in the first round? Do you have an opinion on that. Remember you can bet on it (and many other events) on www.onehash.com — the fastest growing bitcoin-only mutual betting website: www.onehash.com/event/special_events/segwit/20266