New Development: One out of Four Bitcoin Nodes Upgraded for Segregated Witness
The latest network data from Bitcoin revealed 27 percent of nodes globally are operating codes for Segregated Witness. SegWit was introduced by Bitcoin lead developer Pieter Wuiller during the 2nd Bitcoin Scaling Conference in Hong Kong last year (December 6 and 7). This forum was attended by miners, developers, business owners, and Bitcoin network users.
In the past, Bitcoin network was scaled by increasing block size utilizing the Side Chain and Lightning platforms. Majority of stakeholders never imagined this could be accomplished by decreasing the volume of transactions. As expected, need to scale is compelled by the tremendous growth of transactions/second wherein data recorded and transmitted at 1 MB (mega byte).
What is Segregated Witness?
According to Pieter Wuiller, segregated is interpreted as separated while witness refers to signature. In short, it means “separation of signatures”. Greek technology and sequential entrepreneur Andreas Antonopoulos, a well-respected personality in the Bitcoin industry called this innovation a “turning point” for this crypto-currency.
The logic behind SegWit is to take away signatures from the transaction data stored in Bitcoin blocks. This will result in more storage area in the block to hold more transactions. Bitcoin Core disseminated the upgrade in its most recent software version last October. Segregated Witness was proposed to augment the network’s transaction volume without the need to amplify block size threshold. The move drew both commendations and criticisms from certain sectors following a controversial discussion. Network data indicates the software version which includes SegWit is preferred by note operators.
Notwithstanding the support from ¼ of the total number of nodes, SegWit has not been set in motion across the network. This will only happen if 95 percent of Bitcoin miners take on the software. This will be followed by a moratorium which constitutes 2,016 transaction blocks. Process of signifying support for Segregated Witness is scheduled to start on November 19. Meanwhile, providers of Bitcoin wallets have established the basis for supporting said advancement. However, some sectors in the digital currency’s mining space vowed to oppose the suggestion unless there is a move to increase block size.
Bitcoin transactions are categorized by the 64-digit (hexadecimal hash) described as TXID or Transaction Identifier. This depends on spent coins and those capable of using up transaction results. The manner by which TXID is computed permits all users to make minor changes to transactions. It will not alter the meaning but only the Transaction Identifier.
The process is referred to as “Third Party Flexibility”. There was an effort to resolve said issues gradually through BIP 62 or “Dealing with Malleability”. Yet, this was difficult to execute as consensus examination and discarded. Segregated Witness prevents third party or ScriptSig Malleability or Pliability. This is done by enabling users of Bitcoin to transmit flexible parts of transactions to the “Transaction Witness” and separate the witness. What transpires after this measure? Any changes made do not affect computation of the Transaction Identifier.
The beneficiaries include the following:
- Wallet authors who try to track down spent Bitcoins.
- Anyone who wishes to spend unconfirmed transactions.
- Lightning Network or suggested implementation of hashed time lock contracts or HTLCs with bi-directional payment conduits. This ensures secure routing of payments across several peer to peer payment avenues.
- Users of Block Chain – At present, smart contracts which include micro-payment gateways along with projected new smart contracts are not difficult to understand, design and observe.
Where does Segregated Witness go from here? Many miners are still unconvinced about SegWit believing it has cost the digital currency growth, developer’s time and market share. So, everything depends on the developments that will unfurl within the coming months until 2017.
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