Since Bitcoin was introduced first, its blockchain is far from perfect. Scalability and speed were the main problems of Bitcoin network: it could process only 3 transactions per second, while Visa – 1000. To solve the problem, Bitcoin developers came up with the idea of SegWit – this optimization allows for boosting network throughput capacity without making a hard fork.
Let’s find out what is SegWit, and why it was chosen for improving Bitcoin network.What is SegWit?
Segwit stands for Segregated Witness, and the Segwit meaning becomes clear after considering the structure of the transaction in the Bitcoin network. A transaction consists of two parts:Basic information (who sends, to whom, how much); Witness information, which contains a special cryptographic code (signature). This code is a confirmation that the participant completed the transaction.
The witness part was a problem for the blockchain because formally this signature can be changed only after appearing in the block. It complicates all new transactions since blockchain is a chain of blocks. Unconfirmed operations reduced the speed of new transactions, as they “pull” data from a previous transaction.
Simply put, it is difficult to make quick transfers in Bitcoin and implement large-scale updates due to the features of the current protocol. This problematic feature of the network is often called a “transactional plasticity error.” This is why the introduction of SegWit began.SegWit timeline How SegWit appeared?
The crypto community started considering the modernization of Bitcoin protocol back in 2012. In particular, Bitcoin-Core developers Russell Oknornor, Luke Dashir, Gregory Maxwell and others spoke about possible ways to solve transactional plasticity errors.
In August 2014, Maxwell, Adam Back, and Pieter Wuille launched Blockstream, a blockchain research company. This is how they found a solution to the problem with Witness. The developers de...