Exploring Different Scaling Solutions: SegWit – Bitcoin & Crypto Guide

Segregated Witness, abbreviated as SegWit, is a mechanism to scale the blockchain network. This process involves the removal of signature data from Bitcoin transactions. As a result, it can increase the block size and then attach it as a separate structure at the end. The space that got freed can then accommodate more transactions into the chain. In this article, we continue exploring scaling solutions with SegWit in focus.

SegWit divides the transaction into two separate segments by removing the signature (also called witness data) from the main data. Even after removing the signature, however, the original data continues to hold the sender and the recipient’s information.

The newly created “witness” structure holds information about signatures and script. The original data occupies the same size and counted normally whereas the new “witness” structure occupies a space that is one-fourth of its real size.

Note: Before SegWit, Bitcoin’s maximum block size was 1,000,000 bytes or 1 megabyte (MB). The Bitcoin blocks did not accept any transactions after reaching this size.

Understanding Bitcoin transactions

Bitcoin ledger is a file that stores the metadata of any initiated transaction. A Bitcoin address is generated whenever a user installs a Bitcoin wallet on their computer or mobile phone. We can create more addresses whenever we are sending or receiving coins.

With time, the number of blockchain users is increasing. This, in turn, increases the number of transactions. Effectively, the process adds all these transactions to the block, which again gets added to the chain. On average in every 10 min, one block generation takes place.

As these blocks have a size constraint of 1 MB, each block can thus hold only a few transactions. Also, the heavier the transactions, the heavier is the network. This will invariably cause a network delay in transaction processing and validation.

It is important to remember that the blockchain network comprises multiple nodes that…

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