This week! Bitcoin get hold of a crucial technical and political milestone – upgrading the long-debated scaling Segregated Witness (SegWit).
This show support for much-needed boost to transaction capacity and simultaneously opening long-term doors for more impactful scaling technologies.
The idea observed a high share of argument on its way to lock-in. However, it stimulated grassroots supplement from users who debatably helped to push it. Also, it fascinated criticizers who were serious enough on the subject of splitting from bitcoin and create a new cryptocurrency, eliminating it completely.
In August 2017, finally, the Core developers of Bitcoin introduced SegWit on the Bitcoin Blockchain, while making the platform quicker and more accessible.
In simple words, the SegWit alteration offers an effective way-out in order to get more transactions committed faster – modifying stored data within each block – that is separate out. However, to actually understand what it means, let’s get deep into it.
Segregated Witness: abbreviation of SegWit - is a revamp to the software Bitcoin, designed with an intention to elucidate a range of serious issues.
Developed by a long-standing team, SegWit is a proposed update to the Bitcoin Core – who is yet the most popular Bitcoin reference client, as used by a majority of the verticals in industry.
Initially, the update was designed with an intention of solving transaction malleability - a visible weakness in Bitcoin software. The attack vector is not really damaging users, it has been exploited already in several scenarios, emphasizing a necessity to cover it.
There is range of advantages SegWit incorporates. But the focus yet transformed from solving transaction malleability to resolving the problem of scaling. As you all know, a lot of eponymous articles explained, Bitcoin is going through massive scaling glitches, - with time these glitches are getting worse.
With the advent of SegWit, there is an upsurge in the Bitcoin’s block size limit, allowing the integration of the second-layer solutions for further enhancement.
Due to the insufficient block size, Bitcoin scalability issues primarily arises. The Blockchain encompasses consecutive blocks of transactions. The Blockchain can thus be called as the ledger of all transactions that took place in the network, until now - the vital spark of the cryptocurrency.
The current problem here is, blocks comprise of a hard-coded limit of one megabyte. Not suitable, for the hundreds of transactions that user have to make every minute.
As a result, users have to wait until there is a confirmation of transaction - perhaps for hours or even days. Even though, the extension of the network size only increases transaction intensity. The size of block limit will remain the same, which in turn worsen the problem with the passage of time.
The introduction of SegWit’s solution act as a twofold. Initially, it made an immediate extension of block size limit to four megabytes. There’s one caveat here: four MB is the absolute maximum, the actual block size is however based on the network conditions. As per the predictions of experts, the range will vary in between two to 2.1 megabytes - instantly after SegWit’s activation.
As soon as 95% of the network show support for it - SegWit is set to activate.
There may be a contentious fork if there is an insufficient support for a new set of rules. A significant portion of the network going forward and shifted to a new client, however some opt for the old one. Simultaneously, there will be two cryptocurrencies with different sets of rules that are competing with each other for users.
Due to these scenarios, there may lead to unpredictable outcomes. Expected a negative powerful influence on the value of currencies. However, a contentious fork can be avoided, setting up a specific rule in the software i.e. if unanimous support is received from the network - 95 percent, then only it will activate
Technical, political and ideological are the major source of argument in SegWit.
Technical Argument: An argument against SegWit declared that it will not solve the problems, it committed to solve. Another primary argument stated that the extension of block size due to the update is not able to fulfill the demand of growing Bitcoin user base.
About the high technical competence, as well as the solidity of the technology itself - a majority of the experts seem to agree. However, it seems to be nearly impossible for an individual without programming skills to evaluate the validity of the arguments.
Political Argument: the debate is not completely technological but it includes political aspect too in order to complicate things. Many people working on SegWit are also employed by Blockstream - a company whose primary focus on sidechain solutions.
Inside the community, some claim that this forms a conflict of interest - as the developers are encouraged to hinder the efforts of increasing the block size, so that there is an increase in the demand for sidechain solutions, such as the Lightning Network. However, no definitive proof is out for this claim, still, a large portion of the community choose to believe in it and oppose SegWit.
SegWit have been endorsed by a wide range of individuals and companies.
The entire list is here. An approximate list of 100 companies is either planning, working on or have implemented support for SegWit in their businesses.
Furthermore, many prominent individual contributors of Bitcoin community have made a clear support for SegWit on Twitter, and various other platforms.
The miners contributing the maximum support. An approximate of 33.8 percent of them are signaling their clear approval of SegWit.