SegWit (Segregated Witness)

SegWit (Segregated Witness) is a Bitcoin protocol upgrade that separates signature data from transaction data to increase block capacity and improve transaction malleability.

What is SegWit?

Segregated Witness, activated on Bitcoin’s network in August 2017 at block height 481,824, is a soft fork upgrade designed to optimize the blockchain’s scalability and security.

It restructures how transaction data is stored by separating (or “segregating”) the witness data—primarily digital signatures verifying transactions—from the transaction body. This reduces the size of each transaction, allowing more transactions to fit within Bitcoin’s 1 MB block size limit (effectively increasing capacity to ~1.7-2.2 MB, depending on transaction types).

SegWit addresses transaction malleability, a pre-2017 issue where third parties could alter transaction IDs without changing their content, potentially disrupting unconfirmed transactions. By moving signatures to a separate witness field, SegWit ensures transaction IDs are stable, enabling secure second-layer solutions like the Lightning Network, which supports faster, cheaper off-chain transactions. SegWit also enhances security for multisignature wallets and reduces the risk of certain attacks. Adoption faced initial resistance due to compatibility concerns, but major wallets and exchanges, like Coinbase, now default to SegWit addresses (starting with “bc1”). The upgrade remains backward-compatible, preserving Bitcoin’s decentralized consensus while boosting efficiency.