SegWit or Segregated Witness explained.
SegWit or Segregated Witness is a method of scaling up the Bitcoin network, to confirm more number of transactions in each Block without increasing it’s size. It is invented to help to shrink file size of Bitcoin transactions. It’s basic purpose is to enable Bitcoin network to confirm more number of transactions in the same amount of time.
The concept was introduced by Dr.Pieter Wuille.
To understand SegWit or Segregated Witness in deatail, first understand how a Bitcoin transaction works on a Blockchain network.
How a Bitcoin transaction works?
Suppose a person has sended Bitcoins to another person. This transaction has been added in a Block in the Blockchain. The other person will only receive the Bitcoin when the Miner confirms a whole Block of Bitcoin transactions. Like this transaction, there are various other transactions which are added up in the Block.
A block has a maximum file size of 1 MB ( One Megabyte). When this Block’s space capacity is full, another Block is created and added up in the Blockchain. As Bitcoin transactions are increasing day by day, more number of Blocks are created and adding up in the Blockchain. This is stressing up the Blockchain network and causing delays in getting transactions confirmed. Also as Miners job has increased, the transaction fees are getting higher, making Bitcoin transactions more expensive.
Now here comes the SegWit or Segregated Witness proposal.
Each Bitcoin transaction contains three elements:
- Input ( sender details)
- Output (recipient details)
- Digital Signature, or simply Signature ( This signature is called Witness who verifies that the sender has the right amount of balance to make the transaction)
All the above element is needed to get transaction added in the Block and get it verified thereafter.
Out of the three elements, the file size of Digital Signature is maximum and makes the transactions heavy, in terms of size.
As the maximum capacity of each block at present is 1 MB, therefore:
More number of heavy transactions = Less number of transactions getting added in the Block for confirmation.
SegWit proposes to remove the Digital Signature Element from the transaction and adding it to another new block called, Extended Block. It means any transaction which gets added in the Block for confirmation, will only contain Input and Output and not the Digital signature. This will make transactions lighter. As a result more space is available in the Block. This means more number of transactions can be added into the block to get verified. As more number of transactions will get verified in same amount of time, Bitcoin network will become faster again.
Thus we are removing the Witness (digital signature), segregating it to another Block, hence Segregated Witness.
Advantages of SegWit
- Segwit will reduce the file size of transaction
- It will alsp add more transactions getting in a block.
- Fast confirmation of transactions.
- Low transaction fees.
- Thus, it will scale up the Bitcoin network
Special point about SegWit
- Consensus is not required to make SegWit work
- SegWit will work even of some users does not upgrade their software versions to new version, making it much more easier to implement.
Along with SegWit, concepts like HarFork, UASF also comes.
KryptoMoney.com will explain the above concepts as well.
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