What is SegWit? Segregated Witness, frequently abbreviated to SegWit, is a proposed upgrade to the Bitcoin software application, created to fix a range of severe problems. Its long-standing group establishes it. Bitcoin Core is presently the most popular Bitcoin referral client, in usage by the bulk of the services in the industry.
How was SegWit created?
Initially, the update was targeted at fixing transaction malleability, a popular weak point in Bitcoin software application. This vector of attack is not the most harmful to the users; it has been exploited in several circumstances currently, highlighting the requirement to patch it. Nevertheless, SegWit offers a range of other advantages, and by now the focus of attention has shifted from fixing the transaction malleability to solving the problem of Bitcoin scaling.
What is SegWit’s solution to the Bitcoin scaling issue?
SegWit increases the Bitcoin’s block size limitation and enables the application of the second-layer solutions for more improvement.
What the is main challenge?
Existing problems of Bitcoin scalability develop mostly from the insufficient block size. Successive blocks of transactions are what the Blockchain technology is consisted of. Blockchain, in turn, is the ledger of all transactions that have occurred in the network up till now – the lifeline of the cryptocurrency. The issue here is that currently, blocks have a hard-coded limit of one megabyte. This is not enough to represent the numerous transactions that the users are trying to send out every minute.
Long waiting times
A lot of those users have to wait in line until their transaction can be validated; often for hours or even days. As the size of the network grows, so does the transaction intensity, whereas the block size limitation remains the same, which implies that the issue is continually getting even worse.
SegWit’s two solutions
SegWit’s option to this is twofold. Firstly, it makes it possible for an immediate boost of the block size limit to 4 megabytes. There’s one caveat here: four MB is the absolute maximum, while the actual block size will depend on the network conditions. It is predicted by experts to be in the range of about 2 to 2.1 megabytes immediately after SegWit’s activation.
Secondly, by fixing transaction malleability, SegWit gets rid of what used to be a small problem for Bitcoin itself, however a significant barrier to implementing second-layer solutions on top of it. Among those options is the proposed Lightning Network. It is expected to enable a massive increase in the network capability by moving the bulk of transactions of the Blockchain for fast processing.
What are the main arguments against SegWit?
The key ‘against’ points can be roughly divided into three groups: technical, political and ideological.
Some have argued that SegWit, in its current state, will not be able to fix the issues it promises to solve. Among the primary arguments here is that the block size boost proposed by the upgrade is not almost enough to please the growing needs of Bitcoin’s user base. The bulk of the experts seem to concur about the high technical skills of the authors of SegWit, along with the strength of the technology itself. It is nearly difficult for an individual who is not a programmer to assess the credibility of the arguments proposed by both sides.
The reality that the debate is now not purely technological however has a political aspect too only complicates things. An a lot of individuals dealing with SegWit are also utilized by a company called Blockstream, whose primary product is sidechain options. Some from the community claim that this develops a conflict of interest, as the designers are incentivized to block efforts at increasing the block size, to synthetically increase the demand for sidechain services, such as the Lightning Network. There is no definitive proof for this claim however a large part of the neighborhood has still selected to think in it and is opposing SegWit as a result.
The primary ideological argument, leveled against the upgrade, is that it does not provide scalability while maintaining enough degree of decentralization of the Bitcoin network. As has been stated earlier, SegWit solves the long-lasting problems with Bitcoin’s low transaction capability just insofar as enabling application of second-layer sidechain options, such as the Lightning Network.
The problem some individuals see here is how the sidechains work. To not depend on the highly congested Blockchain, they move the coins to a second-layer system. There, all transactions are processed by a trusted 3rd party, without having to broadcast them throughout the entire network, which saves a lot of resources and time. But a relied on the point of authority in charge is exactly what Bitcoin was indicated to get rid of from the monetary system. For some, that is an inappropriate compromise, no matter how little power the 3rd celebration wields in options such as the LN and others.