This post is about, What Is SegWit and how it related with Bitcoin?
Bitcoin has gone through some major changes in the last few months. From skyrocketing to the all-time high over $4,000 in just a few months to a chain split that resulted in a new altcoin – Bitcoin Cash.
But that’s not the end of the Bitcoin turmoil. In November, this year, Bitcoin will likely go through a second hard fork. Meaning, we will have three different Bitcoins, each one of them resembling the original code but with a different capacity.
While there has been a lot of people involved in the proposed changes there’s only one thing to blame…. SegWit.
Now you’re probably asking yourself what is SegWit and what does it mean for Bitcoin? There’s been so much hype about it but not many of us understand SegWit’s impact.
What Is SegWit?
Bitcoin has been present on the market for almost 10 years, during which it became extremely popular.
The network was designed in a way that no updates can be done, without reaching the majority of consent. So you can imagine how difficult it could be to get 95% of the users to agree on something and implement that change.
Hence, Bitcoin has been going back and forth until it reached the unbearable level of transactions taking up to 5 hours for a confirmation from miners. Obviously, such an advanced technology like blockchain cannot keep on going like this and fall behind Visa or MasterCard.
So a group of developers came up with a solution called Segregated Witness (SegWit). This fancy name relates to the block capacity and processing transactions.
If you’re at least a bit familiar with Bitcoin, then you would know how processing transaction works. Once you send cryptocurrency to another person, it enters the public ledger and awaits the miner confirmation.
The transaction is a block which consists of your signature (private key) and the public address of the recipient. This data is currently locked in a 1MB block, and with so many transactions being requested throughout the day, there’s simply not enough space for all the blocks to fit in the network.
Hence, the idea of SegWit. The update would take some of the data from a 1MB block and store in a separate, extended block. It would automatically release the space on blockchain network and speed up the transaction process.
So, that’s what SegWit would do – increase the transaction speed and solve the malleability issue the network had for years.
While the majority of developers expressed their support for SegWit., and it has been locked in August this year, there were different ideas on how to improve the network more drastically, and for longer.
What Is Bitcoin Cash?
A group of developers, which opposed SegWit, had an idea of increasing the network size to 8MB. Bitcoin network would drastically increase, without SegWit, but with a risk of an easier hackers’ attack.
This solution was followed by a hard fork and breaking off from the original Bitcoin. The hard fork created Bitcoin Cash, which is a continuation of Bitcoin and will give an increase of the blockchain ledger to allow a further growth.
Bitcoin and Bitcoin Cash don’t work in a partnership. Bitcoin Cash became a separate cryptocoin, with its own protocol and price.
Three Different Bitcoins
Even though the hard fork was expected to cause major network disruptions, everything happened rather smoothly. Bitcoin has split into two, and each one of them has started living they’re separate live on the exchanges and within wallets.
We were supposed to wait until November for SegWit to be fully activated on the network, putting an end to Bitcoin dispute.
However, in the last few days, there was a confirmation of another hard fork, bound to happen in November.
So, in November will be facing three different Bitcoins:
- Bitcoin – 1MB block and implemented SegWit
- Bitcoin Cash – 8MB blocks, without SegWit
- SegWit2x / New York Agreement Bitcoin – 2MB block and implemented SegWit
At the moment, we don’t know which one will be considered as the original one. Each one of them will have a different presence on the market and their own price.
Most likely, it will be the third option, with 2MB blocks and SegWit. It’s the most sensible option, which will fix all the pending issues and open the doors for future updates.
Bitcoin has finally entered a new chapter. Regardless of the Bitcoin you choose, they will all work more efficiently than the original one at the moment.
Implementing SegWit to the Bitcoin network will bring not only all the necessary updates but it will also open a space for further improvements, e.g. Lightning Network.
What is SegWit and what does it mean for Bitcoin? It’s the future for the mother of all cryptocurrencies, bringing an exciting breath of fresh air and putting Bitcoin again on the cryptocurrency forefront.
Until now, it was Litecoin that was considered as a silver to Bitcoin’s gold. But that may change very soon. Bitcoin could become even stronger, with the support of its offsprings.
I hope you like this post, let me know your suggestions in comment box!!