What is SegWit? Everything You Need To Know About the It

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In today’s guide, we are going to learn about Segwit and how it works. If you have heard about this term in cryptocurrency and it made you wonder what it is, then you should give this article a read. As you know like every computer program, cryptocurrencies also need to be updated. These updates are implemented in order to fix some glitches in the protocol. So, what is Segwit and what does it have to do with all of this? The reason we mentioned updates here is that Segwit is also a kind of update that was implemented to Bitcoin’s protocol.

Let’s know about what is SegWit in detail and how it works. If you are new to cryptocurrency and first like to clear your concept about Bitcoin, read our beginners guide to Bitcoin and blockchain. As soon as you grab the basic knowledge about Bitcoin and cryptocurrencies, you can read this article to know about Segwit.

What Is SegWit?

In simple words, Segwit was a modification made to Bitcoin protocol so that it could process more transactions in less time. The process is done by increasing the block size limit on the blockchain by removing signature data from the transactions of Bitcoin. Removing signature data from bitcoin transactions makes more space for transactions on a single block. Segwit means Segregated witness, in which segregate means to separate and witnesses refer to transaction signatures. So, the meaning of Segregated witness is to separate transaction signatures.

The SegWit upgrade was first suggested by a Bitcoin developer, Pieter Wullie in 2015. It was to fix the issue of scalability and transaction malleability in Bitcoin. Transaction malleability is an issue in Bitcoin that allows users to steal Bitcoin by changing the unique transaction ID even before it is confirmed. This way the person can get the bitcoin and make it look like the transaction didn’t happen. To fix these issues, Pieter Wuliie proposed the idea of SegWit which was finally performed in August 2017. Before that, the patch was implemented to the Litecoin protocol as it has the same issue of transaction malleability.

The Problems That Needed To Be Addressed

Before we get into details about what is Segwit, let’s learn why it was proposed in the first place. In bitcoin, blocks are created every ten minutes and the block size is limited to 1MB. The issue is that there are so many transactions made on the chain that it is delaying the whole process.

Think of it like there’s only one roadway to a particular destination which runs easily when there are up to 2000 cars driven on it. But if the number of cars starts to increase, it creates delays and jamming. The same was happening with Bitcoin’s block, which could only process a limited transaction at a time. Now that the cryptocurrency is very famous, more and more people are using it to process transactions, the time taken to process each transaction was increased from 10 minutes to hours and days.

Learn How Segwit Works To Fix These Bugs

SegWit was proposed to improve the block size of Bitcoin so that it could process more transactions in less time. The protocol does two parts of the original block one of which remains the same as before and the second is the extended block known as “witness” block. The signature data is removed from the transaction from the original block and placed into the new extended block. This eventually makes more space in the original block making it able to store more data. Nothing of this changes the original size of the block, only signature data is separated and kept in an extended block which is one-fourth of the size or block.

The original block still contained the sender’s and receivers data and the extended block has all the signatures and codes.

When in July 2017, the majority of miners agreed upon the implementation of SegWit it was activated the next month. There wasn’t much dispute in the community regarding the SegWit upgrade as it was a soft fork. SegWit is backwards compatible and the updated nodes can still work with the previous non-updated nodes.

SegWit Pros and Cons

The Pros

  1. SegWit upgrade has successfully fixed the issue of transaction malleability which was one of the significant glitches in Bitcoin’s protocol.
  2. More transactions can be processed on the blockchain while the size of the block is still the same. 
  3. The more the speed of transaction, the less would be transaction fees. So, SegWit has reduced the transaction fee of Bitcoin which used to be higher.
  4. SegWit makes it possible to solve scalability issue on a larger scale with projects like Lighting network.

The Cons

  1. Although SegWit was a great achievement of bitcoin, not everyone has welcomed it with open arms. A lot of miners disapprove using SegWit as it reduces the transaction fees which lowers their profits. This is the reason the adoption of SegWit was slow, although the percentage has crossed 65% by now.
  2. The upgrade hasn’t solved much of the scalability problem and it’s only a short-term solution.
  3. It has become the reason for so much dispute amongst the Bitcoin community and has already caused many hard forks, one of which is Bitcoin Cash.


We hope the information provided above was easy to understand and at least now you know What is SegWit. Bitcoin was the first-ever cryptocurrency to be created and it is still leading the race. However, there are many other cryptocurrencies in the market now with various capabilities and use cases. If you are also interested to know about them, read our guide best altcoin to invest in 2020

Now that you know everything about how SegWit works, what’s your opinion about it? Do you think SegWit has helped Bitcoin become better or are you on the other side? Before you get onto any conclusion, how about knowing what is Bitcoin Lightning Network and its working

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