Bitcoin Scaling Question: What Exactly Is Segregated Witness?

There has been a lot of talk about the Segregated Witness solution in recent months, and what makes it so attractive is that it can solve the long-standing debate over Bitcoin’s block size. Although not everyone is in favor of Segregated Witness at the moment, there are some interesting developments that are very attractive.

Segregated Witness is an elegant and terrifying solution to the Bitcoin block size debate. Don’t take it literally, we need to consider the merits of Segregated Witness. First, this solution uses a soft fork instead of a hard fork to solve the scaling problem.

In more general terms, soft forks require code changes that do not affect the Bitcoin core protocol, while hard forks can be deployed in the short term, but they run the risk of the entire Bitcoin protocol not being able to execute correctly. Unfortunately, this means that Segregated Witness is a slightly slower block size solution. In addition, soft forks only require the majority of Bitcoin network users to upgrade their clients, while hard forks require everyone to upgrade in the shortest possible time.

Segregated Witness goes beyond that, it allows the Bitcoin signature field to be separated from the Bitcoin transfer process. In fact, the transaction signature is put into a Merkle tree, so the size of the transaction will appear to be smaller, so the Bitcoin block can accommodate more transactions without changing its size.

Additionally, Segregated Witness can further improve scaling issues in a more seamless manner. Transaction malleability will be removed from the equation, a problem that has plagued Bitcoin for a long time. Re-signing a transaction to change the transaction ID will become impossible. This provides additional security for Bitcoin transfers.

The Bitcoin Foundation has already begun deploying Segregated Witness with the release of the Bitcoin Core client. However, the activation process will not officially begin until version 0.12.2 is released. At that time, everyone supporting Bitcoin Core will be advised to upgrade as soon as possible. Only when 95% of the network hash power has moved to the new Bitcoin Core client - which will take at least two weeks - can the activation of Segregated Witness be considered successful.

However, this is not the final step. There is no point in deploying SegWit until all Bitcoin wallet solutions offer these new types of transactions. Although some wallet providers are faster, it is currently impossible to estimate how long this process will take.

Exchange rate at the time of posting: Bitcoin standard price Buy price: ￥2977.98 Sell price: ￥2972.03 (Source: Good Bitcoin, a wallet with interest)

Original article: http://themerkle.com/what-is-segregated-witness/
Author: JP Buntinx
Compiled by: Kyle
Source (translation): Babbitt Information (http://www.8btc.com/what-is-segregated-witness)