SegWit: A Bitcoin Upgrade That Permanently Changes Network Efficiency

Have you ever wondered how Bitcoin addresses the transaction bottleneck issue? The answer is SegWit (Segregated Witness), a protocol upgrade implemented in August 2017 that became an important milestone in the evolution of Bitcoin. This innovation is not just a technical improvement, but a transformation in the way the network processes data and stores information.

How does SegWit work?

Essentially, SegWit separates two important components in every Bitcoin transaction: the transaction data itself and the “witness” data (saksi). The witness data includes digital signatures, public keys, and other verification elements.

Before SegWit was implemented, signature data consumed up to 65% of Bitcoin block capacity. By moving witness data to a separate structure that is not counted towards traditional block size limits, SegWit effectively increased block capacity from 1 MB to around 4 MB. This change is not just about numbers—it's about solving the constraints that have limited Bitcoin transaction speed.

Real Impact: Faster, Safer, More Innovative

Block capacity increases directly translate to higher throughput. With more transactions able to be included in a single block, TPS ( transactions per second ) increases significantly, reducing queues and transaction costs during peak network times.

However, the benefits of SegWit are not just about speed. This upgrade addresses a vulnerability known as transaction malleability— a potential threat where an attacker can modify the transaction ID before confirmation. By separating the signature from the main transaction data, SegWit completely eliminates this attack vector. More importantly, this solution paves the way for innovations in second-layer protocols like the Lightning Network, which enables microtransactions and instant payments on the Bitcoin blockchain.

The Origins of Debated Innovation

Bitcoin developer Pieter Wuille initiated the concept of SegWit in 2015 through collaboration with other Bitcoin Core contributors. The implementation as a soft fork in 2017 ensured backward compatibility—older nodes could still operate without issues. However, this transition was far from smooth.

Controversies and Divisions

SegWit has become a major breaking point in the Bitcoin community. Some members view the upgrade as too complex and carrying risks of vulnerabilities that have not been clearly defined. Specific concerns revolve around “anyone-can-spend” transaction scenarios or the possibility of inputs not being properly validated on the unupgraded network.

This philosophical difference created a historic moment: the split into Bitcoin Cash, which chose to directly increase the block size to 32 MB without adopting SegWit. This bifurcation choice reflects a deep debate about the trade-off between simplicity and scalability in blockchain design.

As of today, SegWit remains one of the most influential upgrades in Bitcoin's history, shaping the protocol architecture and driving the evolution of layer 2 technology.