SegWit: Segregated Witness, explained

What it changed

Segregated Witness, defined in BIP 141, moved the signature data (the witness) out of the main part of a Bitcoin transaction. Two problems were solved at once. Transaction IDs could no longer be changed by tweaking signatures, a bug known as malleability, and blocks could fit more transactions.

Instead of a strict 1 MB size, blocks are measured in weight units with a 4 million limit, where witness data counts less. In practice SegWit blocks can exceed 1 MB.

How it activated

SegWit was proposed in 2015 and released in Bitcoin Core 0.13.1 in late 2016, but miners stalled. Pressure from users through BIP 148, the user activated soft fork, plus the New York Agreement among businesses, led to lock in during August 2017. It activated at block 481,824 on August 24, 2017, three weeks after Bitcoin Cash split away.

Why it matters

Fixing malleability made the Lightning Network practical, since Lightning relies on transactions that refer to each other before they are broadcast. SegWit also introduced version numbers for scripts, which Taproot used in 2021. Addresses that start with bc1 are SegWit addresses.