Press ESC to close

What is Segwit?

Hey there! Some links on this page are affiliate links which means that, if you choose to make a purchase, I may earn a small commission at no extra cost to you. I greatly appreciate your support!

“What is Segwit? In this short video by 99Bitcoins, the concept of Segwit (segregated witness) is explained. Segwit was developed to reduce the file size of Bitcoin transactions, enabling more transactions to be confirmed with each block. By separating the witness data from the transaction itself, the overall size of the transaction is reduced. Unlike other network updates, Segwit does not require the consensus of the entire Bitcoin network, making it easier to implement. This method of scaling allows for more transactions to be confirmed without increasing the block size. For a complete text guide, visit the 99Bitcoins website.”

“Hey guys, I’m John from 99Bitcoins and welcome to another video. Today, we’ll be discussing a term that you may have heard recently – Segregated Witness, or Segwit for short. Its purpose is to shrink the file size of Bitcoin transactions, resulting in more transactions being approved when a block is confirmed. This video provides a clear explanation of Segwit and how it functions. Stay tuned for more valuable content from 99Bitcoins. Thank you for watching!”

What is Segwit?

What is Segwit?


Segwit, short for Segregated Witness, is a proposed solution to the scalability issues faced by the Bitcoin network. It was introduced by Bitcoin Core developer Dr. Pieter Wuille in late 2015 and was officially implemented as a soft fork in August 2017. Segwit aims to increase the transaction capacity of the Bitcoin blockchain by separating the witness data from the transaction data.


The primary purpose of Segwit is to address the problem of transaction malleability. In traditional Bitcoin transactions, the signature data, also known as the witness data, is included within the transaction data. This makes it possible for anyone to modify the transaction ID without invalidating the transaction itself. By separating the witness data from the transaction data, Segwit solves this issue by making the transaction ID independent of the witness data.

How does Segwit work?

Separating the Witness from the Transaction

In the Segwit implementation, the witness data, which includes the signatures, is moved outside of the transaction data structure. It is stored in a separate data structure called the “witness.” This separation allows the signature data to be stripped off when verifying the transaction, reducing the overall size of the transaction.

Consensus Requirements

To successfully implement Segwit, a majority of the network’s nodes need to upgrade to the new software version, which includes the necessary rule changes. This ensures that the new rules for handling Segwit transactions are enforced by the network.

Soft Fork Implementation

Segwit was implemented as a soft fork, meaning that it maintained backward compatibility with the existing Bitcoin network. This allowed nodes running older software versions to continue functioning without any issues. Segwit transactions are recognized as valid by all nodes, regardless of whether they have upgraded to the new software or not.

Benefits of Segwit

Increased Transaction Capacity

One of the main benefits of Segwit is the increased transaction capacity it offers. By separating the witness data, which can make up a significant portion of the transaction size, Segwit effectively increases the block size limit. This allows for more transactions to be included in each block, leading to a higher throughput and alleviating congestion on the Bitcoin network.

Reduced Transaction Fees

With the increased transaction capacity, Segwit helps reduce transaction fees. The smaller transaction size resulting from the separation of witness data means that fewer fees need to be paid per byte of data. This is particularly beneficial during times of high network activity when transaction fees can skyrocket.

Enhanced Security

Segwit improves the security of Bitcoin transactions by fixing the transaction malleability issue. With the witness data separated from the transaction data, it becomes impossible to modify the transaction ID without invalidating the transaction. This enhances the integrity and reliability of Bitcoin transactions.

Improved Network Efficiency

By reducing the size of transactions, Segwit improves the overall efficiency of the Bitcoin network. Smaller transactions require less bandwidth to propagate across the network, resulting in faster dissemination and improved network performance. This is especially important in regions with limited internet connectivity or slower network speeds.

Challenges and Criticisms of Segwit

Lack of Full Consensus

While Segwit has been successfully implemented, it did not achieve full consensus among the Bitcoin community. Some users and developers voiced concerns about the proposed solution, leading to a split in the Bitcoin network and the creation of alternative cryptocurrencies like Bitcoin Cash. The lack of full consensus highlights the challenges in implementing changes to a decentralized network with diverse stakeholders.

Compatibility Issues

The separation of witness data introduced with Segwit can create compatibility issues with older wallets and software that are not updated to support the new transaction format. This can result in some transactions being incompatible with certain wallets or services, requiring users to either upgrade their software or find alternative solutions. However, the widespread adoption of Segwit-compatible wallets and services has mitigated this challenge over time.

Resistance from Miners

The implementation of Segwit faced resistance from some miners within the Bitcoin network. The increased transaction capacity and reduced fees resulting from Segwit could potentially impact the revenue of miners who rely heavily on transaction fees for their income. This resistance and disagreement within the mining community caused delays in the activation of Segwit and led to heated debates within the Bitcoin ecosystem.

What is Segwit?

History of Segwit

Invention and Proposal

Segwit was invented by Dr. Pieter Wuille, a prominent Bitcoin Core developer. It was first proposed in a Bitcoin Improvement Proposal (BIP) in December 2015, outlining the technical details and advantages of the solution. The proposal sparked intense discussions and debates among the Bitcoin community, with supporters and critics expressing their views on the potential impact and feasibility of Segwit.

Activation and Adoption

After months of deliberation and testing, Segwit was eventually activated on the Bitcoin network on August 24, 2017, with the mining of the 481,824th block. The activation occurred through the BIP 91 agreement, which required a significant majority of miners to signal their support for Segwit. Following the activation, various Bitcoin wallet providers and exchanges started implementing Segwit support, gradually increasing its adoption across the ecosystem.

Comparison with Other Scaling Solutions

Segwit vs. Increasing Block Size

One of the alternatives to Segwit proposed to address the scalability issue was an increase in the block size. Advocates argued that a larger block size would allow more transactions to be included in each block, thereby increasing the network’s capacity. However, increasing the block size had its own challenges, such as longer propagation times, increased storage requirements, and centralization risks. Segwit, on the other hand, provided a more elegant and backward-compatible solution to expanding the transaction capacity.

Segwit vs. SegWit2x

SegWit2x was a controversial proposal to combine the activation of Segwit with a block size increase to 2MB. While it gained support from some members of the Bitcoin community, others expressed concerns about the increased centralization risks and potential negative impact on Bitcoin’s decentralization. Ultimately, the SegWit2x proposal was abandoned before its scheduled implementation, and Segwit remained as the implemented solution.

Segwit vs. Lightning Network

The Lightning Network is another scaling solution for the Bitcoin network, aimed at facilitating off-chain transactions. It leverages the security of the underlying Bitcoin blockchain while offering near-instantaneous transactions with significantly lower fees. Segwit plays a crucial role in enabling the Lightning Network by providing a transaction format compatible with the network’s smart contracts and channel management techniques. These two solutions are often seen as complementary, with Segwit addressing on-chain scalability and the Lightning Network addressing off-chain scalability.

What is Segwit?

Segwit’s Impact on Bitcoin

Transaction Volume

Since its implementation, Segwit has significantly increased the transaction volume on the Bitcoin network. The increased transaction capacity allows for more transactions to be processed within each block, accommodating the growing demand for Bitcoin transactions. This has led to a smoother user experience and a reduction in transaction backlogs during periods of high network activity.

Confirmation Times

With the increased transaction capacity and reduced congestion on the network, Segwit has contributed to shorter confirmation times for Bitcoin transactions. This means that users experience faster confirmation of their transactions, enhancing the usability of Bitcoin in everyday transactions and improving its competitiveness with traditional payment systems.

Network Security

Segwit has improved the overall security of the Bitcoin network by addressing the transaction malleability issue. The separation of witness data has made it impossible for malicious actors to tamper with transaction IDs, enhancing the integrity and reliability of the blockchain. This increased security instills confidence in users and strengthens the network against potential attacks.

Bitcoin Price

While it is challenging to attribute changes in the Bitcoin price solely to the implementation of Segwit, it is believed to have contributed positively to investor sentiment. The improved transaction capacity, reduced fees, and enhanced security provided by Segwit have made Bitcoin more attractive as a digital currency and store of value. This increased demand and positive perception of Bitcoin may have had an impact on its price dynamics.

Segwit and Future Developments

Integration with Other Cryptocurrencies

Segwit’s success in addressing the scalability challenges of the Bitcoin network has inspired other cryptocurrencies to adopt similar solutions. Several altcoins and blockchain projects have implemented their own versions of Segwit or adopted Bitcoin’s Segwit implementation to improve their transaction capacity and security. This cross-pollination of ideas and innovations contributes to the overall development and maturation of the blockchain ecosystem.

Further Improvement Proposals

As with any technology, there is always room for improvement. While Segwit has successfully addressed the transaction malleability issue and enhanced the scalability of the Bitcoin network, further proposals and improvements are being explored. Ideas like Schnorr signatures and Taproot aim to further optimize the efficiency and privacy of Bitcoin transactions, building upon the foundation laid by Segwit. These proposals, if implemented, have the potential to bring additional benefits to the Bitcoin ecosystem.

What is Segwit?


Segwit has played a significant role in addressing the scalability challenges faced by the Bitcoin network. By separating the witness data from the transaction data, it has increased the transaction capacity, reduced fees, enhanced security, and improved the overall efficiency of the network. While it faced challenges and criticisms along the way, Segwit’s activation and subsequent adoption have led to positive impacts on transaction volume, confirmation times, network security, and potentially Bitcoin’s price dynamics. As the Bitcoin ecosystem evolves, the lessons learned from the implementation of Segwit will continue to inform future developments and scaling solutions.

I am Jesse, The head author and writer at, the go-to resource for all your crypto capital news. As the tagline suggests, I provide in-depth analysis, breaking down complex blockchain mechanisms, market trends, and the socio-economic impacts of cryptocurrencies. If you're new to the crypto scene, my beginner guides will take you from novice to knowledgeable in no time. Stay up to date with real-time news from the ever-evolving cryptocurrency markets and engage with a community of like-minded individuals through our forum discussions and events. With expert reviews, a comprehensive resource library, and a focus on security and privacy, Mutual Capital Crypto is your trusted source for all things crypto.