Segregated Witness (SegWit) now activated on Bitcoin Blockchain
The latest Bitcoin news is that the Segregated Witness or SegWit or Soft Fork is now activated on the Bitcoin Blockchain network. It is being observed that all SegWit ready nodes have started enforcing the new SegWit consensus rules.
SegWit basically means to remove the signature from the transaction and lighten the weight of a transaction, in order to create more space in a block. The block size limit in the Bitcoin Blockchain network is now replaced by a “Block Wieght” limit. This allows the blocks to increase upto 4 Megabytes in size.
SegWit is the biggest Bitcoin network update till date and this will change the whole appearance of blocks in the Bitcoin Blockchain network, but only on the SegWit upgraded nodes.
Additionally, and perhaps more importantly, SegWit transactions won’t suffer from the “malleability bug,” which in turn enables advanced second-layer protocols like the Lightning Network, atomic swaps, MAST, and more.
What will happen to Bitcoin Blockchain when SegWit is activated?
As the Segreagted Witness or SegWit has been activated on Bitcoin Blockchain network, following outcomes are expected:
Block Size Limit is now Block Weight Limit
The previous block size of 1 Megabytes can now be increased upto 4 Megabytes. Although 2 megabytes is a more realistic figure.
But this does not mean that all blocks in the Bitcoin Blockchain network will immediately increase upto 2 megabytes in size. The extra space of 1 megabyte in the block can be utilized by the transaction only if it is sent from a SegWit address (output) to another SegWit address.
Also, to send and receive transactions on a SegWit address, the Bitcoin wallets and other applications need to be upgraded.
This means that every Bitcoin Exchange and Bitcoin wallet service provider should upgrade their infrastructure to be SegWit ready.
BitGo, a Bitcoin infrastructure provider for major exchanges like Bitstamp, Kraken and OKCoin, expects to be SegWit-ready relatively soon as well.
Risk associated with SegWit
SegWit activation do posses some risks for users.
Firstly, the risk applies to all soft forks, and depends on miners actually accepting the new protocols. Ig some miners does not follows the new rules, the non-upgraded nodes could accept invalid transactions and blocks, until the Bitcoin Blockchain network corrects Blockchain reorganization (“reorg”).
In the past, soft forks”https://en.bitcoin.it/wiki/Softfork#2015_BIP66_Blockchain_Fork”> caused some minimal network disruption, but the risks do seem limited this time around.
Secondly, the first couple of hours after activation of SegWit could open a small window for advanced types of miner attacks, which are 51% attacks. If large amount of Bitcoins are sent to SegWit addresses after activation, miners could theoretically still “roll back” the blockchain to a point in time before activation to re-build it from there. Since SegWit outputs are not secure before activation, such a rollback could allow miners to steal these funds.
Like any other 51% attack, the costs to perform this attack increase for every block that is found after activation, to the point where the attack becomes infeasible within a couple of hours. That said, it is probably wise not to send huge amounts of bitcoin to SegWit addresses straight away, and instead to wait at least a couple of hours or maybe days.
Price of Bitcoin
Segwit has been adopted ultimatly to improve the Bitcoin network. Well, if all things goes well, Bitcoin network improves and the speed of Bitcoin transaction increases, the price of Bitcoin will surely shoot up.
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