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In this episode of The Van Werdenum Sjorsnado, presenters Aaron van Werdenum and Sjors Provoost discussed Segregated Witness, also known as SegWit. SegWit was the last soft fork to be activated on the Bitcoin network in the summer of 2017, and it was the largest upgrade of the Bitcoin protocol to date.
In short, with SegWit, transaction data and signature data could be separated into Bitcoin blocks. In this episode, the hosts explained how this works and that it has four main benefits:
First, SegWit solved the problem of transaction malleability, where transaction IDs could be changed without invalidating the transactions themselves. Solving the problem of the malleability of transactions itself made second-layer protocols such as the Lightning Network possible.
Second, SegWit offered a modest increase in the block size limit by discounting the “weight” of witness data, particularly signatures. What is important is that this can be done without the need for a hard fork.
Third, SegWit’s script versioning made it easier to upgrade to new types of transactions. The expected taproot upgrade could be a first example of this feature.
And fourth, signing entries solved some fringe problems that required wallets to ensure transaction fees weren’t overpaid. Hardware purses in particular benefit from this solution.