Read time: 

What is a Segregated Witness (SegWit)?

The cryptocurrency sector changes very fast, with more solutions being created to tackle existing problems and improve the experience of the users. One of the big milestones in this area is Segregated Witness (SegWit). 

They started to push this technology as a solution to some of the Bitcoin issues like transaction malleability and scalability. This article will explain the concept of Segregated Witness, how it functions, and what it means to the cryptocurrency ecosystem.

Understanding Segregated Witness

What is Segregated Witness?

Segregated Witness, commonly known as SegWit, is a protocol upgrade that was activated on the Bitcoin network in August 2017. 

SegWit will solve transaction malleability once and for all, and also gives the network the capacity to handle more transactions per block. 

Segregated witness refers to the separation (segregation) of the digital signatures (witnesses) from the transaction data.

Transaction Malleability

Prior to the activation of SegWit, Bitcoin was susceptible to a problem called transaction malleability. 

This vulnerability made it possible to change the transaction ID (hash) on the blockchain before it was verified. Segwit solves this by untangling the signature data from the transaction data. 

Separating these two from the node in the internet layer of the project will not allow you to change the transaction ID after signing the transaction, which will increase the transaction's reliability.

How SegWit Works

Effectively, SegWit changes the way in which the data is stored in Bitcoin blocks. In the traditional sense, a Bitcoin transaction has inputs and outputs, and the signature data is embedded in the transaction data. 

This structure is changed to split out the signatures (the witness) Segregated Witness. When this change is combined with the activation of SegWit, this results in a good capacity boost as it increases the amount of space available in each block for transaction data.

Benefits of SegWit

Increased Block Capacity

Perhaps one of the most important benefits of SegWit is the increased capacity of the blocks. Moving the signature data out of the main block, frees up more space for transactions. 

The result of the above is that the network is able to process more transactions on a per-block basis, increasing throughput and efficiency as a whole.

Lower Transaction Fees

As we can stuff more transactions into each block, the average transaction fee goes down. 

The solution: Bitcoin Cash offers lower transfer fees, allowing a wide variety of users to use the platform without too costly fees. 

This is essential since transaction fees can vary according to how busy the network is.

Enhanced Security

SegWit addresses the issue of transaction malleability, and it does that by improving Bitcoin network security. 

This prevents the details of a transaction from being modified once it is signed, thus lowering the odds of fraud and double-spending.

Lightning Network Compatibility

The Lightning Network is a second layer solution built on top of SegWit, which makes transactions cheaper and faster. 

Working on top of the malleability fix from SegWit, the Lightning Network can allow nearly instantaneous payments with few if any fees.

SegWit Adoption

Initial Reception and Adoption Rate

When SegWit was first introduced it had mixed feelings from the enviroment. Many welcomed the advantages it was accompanied by, and others were critical to the way it was applied. 

But eventually, the benefits of SegWit started to materialize, and the rate of adoption began to rise.

Current Adoption Levels

SegWit adoption for Bitcoin transactions is reasonably high at this stage. 

Over time, many have bought into SegWit support given that leading exchanges, wallet providers, and payment processors have integrated it. 

SegWit has led to a reduction in fees and enhanced the traffic-handling capacity of the Bitcoin network.

Impact on the Cryptocurrency Industry

Scalability Solutions

On Bitcoin's long road to scalability, the introduction of SegWit was a major milestone. 

SegWit has undoubtedly been necessary to improve Bitcoin's ability to scale with an increasing number of users and transactions by allowing for larger block capacity, as well as facilitating second-layer solutions such as the Lightning Network.

Influence on Other Cryptocurrencies

The success of SegWit has actually led to other cryptocurrencies to implement a similar activation. 

Some altcoins have since implemented SegWit-like solutions to improve their own networks. 

Such a technology, when cross-pollinated, has also made wider enhancements in the cryptocurrency circuit.

Future Developments

This is made possible after the implementation of SegWit. The more developers build on these foundations, the more we can expect to see valuable developments in the security, efficiency, and user experience of native blockchain applications.

Challenges and Criticisms

SegWit Activation Process

Activating SegWit was not easy; thus, it had to have broad agreement among the miners, developers, and users. 

The method was mutually contentious, and the strife produced discussions and Bitcoin forks such as Bitcoin Cash.

Partial Adoption

The second is that not everyone has jumped on the SegWit bandwagon of reduced block size and lower fees. 

However, not all wallets and services have implemented this technology yet which has limited the technology ideal usefulness. 

Achieving higher percentage adoption of SegWit is also important to realize these benefits to the full extent.

Technological Complexity

It is this technological complexity inherent to SegWit that can be a major barrier to entry for some users and developers. 

SegWit is hard to grasp and deploy, because it requires in-depth knowledge of the Bitcoin protocol, which is rather necessary for non-technical users and smaller development teams.

SegWit and ICOs

Active ICOs and SegWit

On existing active ICOs (Initial Coin Offerings) - adding Spotify support can secure and speed up fundraising. ICO organizers can protect themselves from fraud by using SegWit-enabled wallets to handle transactions.

Upcoming ICOs and SegWit

In the future, this technology can be very helpful for the ICOs that it would make it the most popular as now in blockchain technology

When more and more investors get exposed to the advantages of SegWit, they might start to prefer ICOs that are using it due to the reduced risk that they perceive from that ICO.


Bitcoin has evolved with a host of improvements over the past years, largely thanks to the adoption of Segregated Witness (SegWit) to fix issues such as transaction malleability and scalability in the protocol. 

Which has lower fees, more blocks, increased security and Lightning Network integration among other benefits. 

Adoption and comprehension of SegWit are essential for anyone in the cryptocurrency space, as it will play an increasing role in the development of digital currencies and the broader blockchain landscape for years to come.

Share This Article


Subscribe To Our Newsletter