A beginner-friendly introduction to Bitcoin's SegWit, including "What is SegWit? and what are the pros and cons of Segwit?"
What is segwit?
Segwit stands for "segregated witness" and is a technique that reduces bitcoin transaction fees. Segwit moves all of the signature data in a bitcoin block to the end, lumping the signatures of all transactions together. This allows more transactions to fit in the same amount of space, while maintaining the security of the bitcoin blockchain. The most important benefit of more transactions per block is that the transaction cost of each transaction goes down compared to legacy transactions.
What are the pros and cons of Segwit?
Pros of Segwit
Transaction malleability is a thing of the past: SegWit is a simple and creative solution to a major problem in the Bitcoin protocol.
Faster Bitcoin transactions: SegWit makes the Bitcoin blockchain lighter. It allows more transactions to be processed without increasing the overall Bitcoin blockchain size.
Cheaper Bitcoin transactions: Higher transaction speed means lower transaction fees. Bitcoin transaction fees can be incredibly high so any changes that bring them down should be welcomed by the community.
New and exciting developments are possible: If Bitcoin is going to serve a network of millions of people, then it needs to solve the problem of scalability. SegWit helps to make scalability projects like the lightning network a reality.
Cons of Segwit
It isn't being used by enough nodes: A lot of miners don't like SegWit. Lower fees affect their profits and they also don't appreciate having to support the witness-data sidechain which doesn't provide any fee revenue at all. Other Bitcoin services - like wallets - have also been slow to support the SegWit changes.
It's a short-term solution to long-term problems: Some Bitcoin developers have complained that the SegWit protocol doesn't go far enough to solve the scalability problem. They claim that only major changes to the Bitcoin blockchain size and the way transactions are processed will help the platform to scale in the future.
SegWit has caused divisions in the Bitcoin community: The disagreements surrounding SegWit have caused several hard forks. The most well-known of these is Bitcoin Cash (BCH).
Now I hope you can answer “What is SegWit?” for yourself.
