What Is Segregated Witness (SegWit)?
Also known as: SegWit, Segregated Witness, BIP141, BIP 141
In short
SegWit (Segregated Witness) is a protocol upgrade activated by soft fork in August 2017 that separates signature data from the main body of Bitcoin transactions; it fixed transaction malleability and increased block capacity.
Before SegWit, signatures were included in the calculation of the transaction ID (TXID). This allowed third parties to change the transaction ID by making small formal changes to the signature without invalidating the transaction, a problem known as transaction malleability. SegWit moved 'witness' data such as signatures into a separate structure, making the transaction ID independent of this data. This fix paved the way for second-layer solutions such as the Lightning Network, in which unconfirmed transactions are chained together, to operate safely.
The upgrade introduced the concept of 'block weight' in place of the old 1 MB block size limit. Because witness data is counted with a lower weight, blocks can carry more transactions within the limit of 4 million weight units. Native SegWit addresses start with 'bc1' and transactions made from these addresses generally pay lower fees.
Because SegWit was designed as a soft fork, nodes that did not upgrade could remain on the network. However, the process was contentious; part of the group that advocated directly increasing the block size split off and created Bitcoin Cash. SegWit also laid the technical groundwork for the later Taproot upgrade.
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