SegWit

Segregated Witness, commonly called SegWit, is a Bitcoin protocol upgrade that reorganizes how transaction data is stored by separating the digital signatures (witness data) from the rest of the transaction. The goal is to increase transaction capacity, fix certain security issues, and enable future scaling solutions. SegWit was formalized as Bitcoin Improvement Proposal 141 and activated on the main network as a soft fork on August 24, 2017.

Technical implementation centers on separating the witness data from the transaction’s core information. This separation allows more transactions to fit in a single block without increasing the base block size. SegWit introduces a new measurement called block weight, where non-witness data counts four units per byte and witness data counts one unit per byte. The maximum block weight is 4,000,000 units, which effectively increases usable block capacity for blocks that include substantial witness data, while preserving compatibility with older nodes.

A key benefit of SegWit is the mitigation of transaction malleability, which previously allowed transaction identifiers to be altered before confirmation. By moving signatures into a separate witness, most transaction IDs become immutable, enabling the development of second-layer scaling technologies such as the Lightning Network. SegWit also enabled new address formats, most notably Bech32 (beginning with bc1), designed to be more efficient and error-resistant for SegWit transactions.

Adoption has been gradual but widespread among wallets, exchanges, and services, with Bech32 and SegWit-enabled transactions increasingly common. While SegWit does not increase the base 1 MB block size, its weight-based structure and compatibility improvements have contributed to improved throughput and opened pathways for further scaling innovations.