Segregated Witness (SegWit):
SegWit is a soft fork blockchain improvement protocol update that increased the amount of transactions that can fit into a block by as much as 300%. This is possible by “segregating” the witness signatures on each transaction from the rest of the transaction data within the block, and placing it outside the block. Witness signature data is required to validate the data, but not it is not integral to the transaction effects.
Before SegWit, on-chain Bitcoin transaction speeds were limited to 4 transactions per second. After SegWit, on-chain transaction speeds increased to 7 – 11 transactions per second.SegWit also enables second-layer smart contract solutions like Lightning Network to exist, enabling transaction speeds which exceed 100,000+ transactions per second.
Blocks have a finite data limit of 1MB. SegWit is a clever way of putting more transactions into that 1MB without raising the block limit, which would have resulted in a hard fork.
Links
- BIPs – github.com/bitcoin/bips/
- SegWit (Segregated Witness) – Investopedia
- Segregated Witness – Bitcoin Wiki