What is SegWit in the crypto sector?
Since bitcoin experienced rapid growth, the more people using it, the slower the transactions get. There are thousands of cryptocurrencies circulating in the market, and each one has its own set of algorithms that regulate how it operates. So, a protocol is a set of particular algorithms. In this article, you will get the answer to what SegWit protocol is and how it solves BTC’s scalability issues.
First of all, bitcoin’s scalability is one of its primary issues, which developers all across the world are working hard to solve. Cryptocurrency protocols, like many computer systems, must be regularly upgraded and updated. One of the major issues in the blockchain network is network scalability issues and protection against hackers. Thus, the latter issue emerged as a result of the standard block’s intrinsic limited size, which results in a very tiny amount of information being put into it. There are several solutions to this problem, one of which being SegWit. However, this method has considerably increased the throughput of traditional blockchains without requiring a drastic change in their source code. The network’s security and the number of transactions handled per unit of time have both increased dramatically, while the basic operation of bitcoin has stayed consistent.
SegWit is a software update that is compatible with prior versions of bitcoin that is a result of the soft fork. Peter Wülle, a programmer who co-founded Blockstream, a company specialized in digital financial security services, was the first to properly envision SegWit. He originally mentioned his concept at a conference in 2015. Unlike other blockchain-improvement initiatives, Wülle’s approach did not involve a hard fork. Thus, it seemed to be the most suitable method to eliminate the scalability problem since it raises the average bitcoin block size from 1 MB to 1.8 MB by deleting the signature from the block. Given that a transaction’s signature data is 65% of its overall size and that the block is a collection of transactions, we can free up space in the original block by shifting the signature data to a so-called extended block. So, a side block that runs parallel to the primary block is what an extended block is.
The transactional plasticity flaw
However, due to the characteristics of the existing protocol, bitcoin is difficult to make quick transactions and to conduct large-scale changes. This problematic network feature triggered SegWit development and is commonly referred to as the “transactional plasticity flaw”. It is worth noting that SegWit has also been implemented on other platforms such as Litecoin and Vertcoin. Unfortunately, Segregated Witness is not a permanent solution to Bitcoin’s scalability issues because the increase in transaction volume is tiny. Furthermore, SegWig promoted the use of other technologies with similar features, such as the Lightning Network. It gives us hope that the blockchain’s utilization of space will improve.
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Valentina BEREZA, Team bit4you