BitcoinBlockchainTransactions

SegWit Transactions Soar With Bitcoin Upgrade

By March 6, 2018 No Comments

Heavy Lifting  

The release of Bitcoin Core Ver. 0.16.0 along with full SegWit support by major exchanges has resulted in a significant uptick in usage levels of the Bitcoin SegWit protocol.

Though not a block size increase - bitcoin’s block size is still a tiny 1 Mb - the protocol does some significant heavy lifting to reduce the “weight” of transactions on the blockchain, thus reducing transaction times and fees. 

Segregated Side Chain

The upgrade stores digital signatures for transactions on a segregated side chain, creating more blockspace on the chain and increasing the volume of transactions.

SegWit also resolves the problem of transaction malleability, - a bug in which a malefactor can tamper with signatures and cause a corrupt transaction to supersede its legit counterpart on the blockchain.

Long Time Coming

The upgrade to full SegWit support has been a long time coming since its introduction in November, 2016 and release last August.   Developers had been occupied for most of 2017 with a community kerfuffle over doubling bitcoin’s block-size.

Digital signatures occupy 65% of space on the blockchain and yet they can be separated from transaction data and maintained on a side chain without compromising the integrity of the blockchain itself.

Digital signatures occupy 65% of space on the blockchain and yet they can be separated from transaction data and maintained on a side chain without compromising the integrity of the blockchain itself.

Cross-Compatibility

Adoption had also been slow because SegWit has to be specifically enabled on exchanges and wallets, since SegWit and non-Segwit transactions were not cross-compatible. 

Version 0.16.0 finally includes support for “native SegWit addresses,” employing the user-friendly bech32 format that supports SegWit transactions automatically.

Other Improvements

Other improvements to bitcoin’s code include a default replace-by-fee, allowing users to speed up a transaction by replacing it with a higher-fee transaction, and hierarchically deterministic wallets, which allow the creation of child keys from parent keys.

Storing digital signatures on a segregated side chain also solves bitcoin malleability problem, making transactions more secure.

Storing digital signatures on a segregated side chain also solves bitcoin malleability problem, making transactions more secure.

Images via Shutterstock, blockgeeks

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