Segregated Witness (SegWit), the Bitcoin Core development team’s transaction malleability fix and scaling solution, is set to activate within the next 24 hours. Major bitcoin companies including European bitcoin payment processing startup Bitwala are hosting SegWit celebratory events to commemorate bitcoin’s first milestone in scaling.
Many celebratory events are being held across the globe. According to Bitwala, seven events will be held on August 23 in Germany, Slovakia, the US, Switzerland, Poland, Czech Republic, and France.
“The activation of segregated witness is a huge milestone in the development of Bitcoin. A step which enables a literal explosion of cool new features enhancing scalability, fungibility, privacy and usability of our favourite money,” said the hosts of the SegWit activation party led by Bitwala.
Since 2016, the bitcoin industry and the mining community have debated on whether to activate SegWit. The majority of companies in the bitcoin industry advocated for an unconditional activation of SegWit, while mining pool operators including Bitmain, ViaBTC and Bitcoin.com opted for a conditional activation of SegWit called SegWit2x. Proposed and led by the Digital Currency Group-led consortium of 57 companies, SegWit2x calls for the activation of SegWit given the guarantee that the bitcoin block size will be increased to 2MB.
In late July, the bitcoin industry and mining community came to a consensus to activate SegWit via BIP 91, which many analysts described as the last opportunity to prevent the execution of a hard fork. Ultimately, SegWit was activated through its original proposal BIP 141.
There are a few key changes or improvements to look out for in the bitcoin network in the upcoming weeks.
The first major alteration in bitcoin will be significant optimization of bitcoin blocks, which according to several Bitcoin Core developers will likely decrease bitcoin block sizes by 75 percent. Since the activation of SegWit replaces a large chunk of data that is traditionally kept within bitcoin transactions, the size of transactions will decrease substantially and naturally, fees will be much cheaper.
Through SegWit, two-layer solutions such as Lightning will be implemented and several startups such as Zap have developed Lightning-based micropayments wallets to allow bitcoin users to send and receive micropayments with lower fees. After rigorous testing and research, major bitcoin startups could utilize Lightning commercially and possibly offer micropayments services which may be able to effectively process bitcoin payments with more flexibility.
Perhaps most importantly, SegWit eliminates transaction malleability, which is a crucial security improvement for bitcoin hardware wallets. Trezor previously explained that SegWit will allow bitcoin hardware wallets including Ledger and KeepKey to significantly reduce pre-confirmation periods of transactions. In January, Marek “Slush” Palatinus, the CEO and chief architect of Trezor and its parent company Satoshi Labs, wrote:
“SegWit is a blessing for hardware wallets for many reasons. I actually think that rolling out SegWit will increase security, because it will reduce huge complexity in hardware wallets as it is today.”
Bach Nguyen of Trezor noted that SegWit increases security of Trezor and hardware wallets because it eliminates the necessity of requesting previous transactions, saving time for users. Reduction on verification periods means lower probability of potential security issues from occurring.
“It might seem to be a trivial change, but the security implications are large. The lower the amount of operations the hardware wallets need to do, the lower the probability of something going awry,” said Nguyen.
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Last modified: May 21, 2020 9:36 AM UTC