SegWit

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Segregated Witness , or SegWit is the name for an implemented Soft Fork Change in transaction format of cryptocurrency Bitcoin . The formal title "Segregated Witness (Consensus layer)" had the Bitcoin Improvement Proposal number BIP141. The aim was to solve the deformability. It was also intended to mitigate an issue with the blockchain's size limitation, which slows Bitcoin's transaction speed. For this purpose, the transaction is divided into two segments, the unlock signature ("witness data") is removed from the original part and appended as a separate structure at the end. The original section would still contain the sender and recipient information, and the new "witness" structure would contain scripts and signatures. The original data segment is counted normally, but the "witness segment" is actually counted as a quarter of its actual size.

history

Block size limit

Bitcoin is a cryptocurrency, a form of money that uses cryptography to keep transactions secure. Each record of a unit of Bitcoin is called a “block,” and all blocks are sequentially linked together by calculating a cryptographic hash from the previous block and storing it in the next. This forms a chain of blocks or a block chain .

Each bitcoin block contains information about who is sending and receiving a particular bitcoin unit (a transaction), as well as the signature that authorizes each transaction. Originally there was no limit to the size of these blocks. However, this meant that malicious people could invent fake “block data” which, as a kind of Denial-of-Service (DoS) attack, was very long. Your forged blocks would be detected, but that would take a long time and slow the whole system down.

The solution developed by Satoshi Nakamoto should limit the block size to 1 MB . In this way, attacks with large blocks would be detected and rejected immediately without slowing down the network significantly.

Scalability and deformability

The more popular Bitcoin has become, the slower the transactions are due to the limit. A block is appended to the chain every ten minutes ( Proof of Work leads to this delay). The block size limit limits the number of transactions that can fit in the block size. Some websites get around this problem by making "off-chain payments" and making transactions without waiting for confirmation from the blockchain.

Others have suggested changes to Bitcoin that would reform the way it's done, but that wouldn't be backwards compatible. For example, FlexTrans (Flexible Transactions) would shrink transactions by converting the way they are described to a "tag" system and allowing more in chunks of the current size. However, it is not compatible with systems that are not upgrading.

Likewise, there are a number of other unrelated issues that have arisen with the Bitcoin protocol.

The most important thing is "transaction deformability". While a transaction is being signed, the signature does not contain all of the transaction data, and there was no need to even verify the correct signature. That means there are different ways to lose or steal bitcoins. Although a number of different fixes made this unlikely, the bug is still there.

SegWit as a solution

SegWit offers significant backward compatibility. It hides its increased block size by changing the definition of a block to be measured as a million "units" rather than bytes. The "witness" signature data would be separated from the hash tree record of who is sending or receiving the bitcoin. The "witness" data is moved to the end, and each byte of it would count as only a quarter of a "unit". The overall effect would be to change the average block size to around 1.8MB instead of 1MB. That means the existing Bitcoin protocol won't change, so it will work without a software upgrade.

It also addresses the malleability of signatures by extracting signatures from the transaction data so that they can no longer be changed. The transaction ID is no longer deformable. This makes Bitcoin safer to use with the Lightning Network , a way to speed up small payments by bundling them up and writing to the blockchain only at the beginning and end of execution, which would be (slightly) risky as long as the malleability issue is concerned still exists.

activation

SegWit was activated on August 24, 2017. Even so, most of the Bitcoin network transactions have not yet started taking advantage of the upgrade. In the first week of October, the share of network transactions with SegWit rose from 7% to 10%, which indicates a stronger increase in the usage rate.

Segregated Witness (BIP141) is not to be confused with SegWit2x (SegWit2Mb). SegWit2Mb suggested activating Segregated Witness first and then a 2MB hard fork within six months from May 23, 2017.

In May 2017, the Digital Currency Group (not to be confused with the MIT Media Lab's Digital Currency Initiative ) announced that it had made a proposal, known as SegWit2x ("New York Agreement"), by which it would separate the Witness activated at a threshold of 80% of the total Bitcoin hashrate and signaled at bit 4; and activation of a block size limit of 2 MB within six months with a support of more than 80% of the total Bitcoin hash rate. In June 2017, the Segregated Witness proposal got even more complicated with claims that it could infringe patents filed with USIPO. As of mid-2017, the SegWit2x proposal had more than 90% support of the hashrate, however, the SegWit2x proposal was controversial as work on the project is limited to a group of developers who work by invitation only. In mid-July 2017, it emerged that miners were supporting the implementation of the Segwit part of the agreement before August 1, 2017, UASF, trying to avoid the risk of a hard fork for the Bitcoin network.

On November 8, 2017, the developers of SegWit2x announced that the hard spin-off planned for November 16, 2017 had been canceled due to a lack of consensus.

On July 21st, the BIP 91 was locked, which means the Segregated Witness upgrade will be activated at block 477.120. Another milestone was reached by August 8, when 100% of the Bitcoin mining pools signaled support for SegWit, even though SegWit would not be fully activated until August 21 at the earliest, at which point miners began rejecting blocks that do not support SegWit. Initially, most Bitcoin transactions were unable to take advantage of the upgrade. In the first week of October, the share of Bitcoin transactions with SegWit rose from 7% to 10%.

On July 21, 2017, Bitcoin miners completed a software upgrade called the Bitcoin Improvement Proposal (BIP) 91. Which means that the controversial upgrade of the Segregated Witness was activated at block 477.120. SegWit alleviates the scaling problem in two ways:

  • You can build in about twice as many SegWit transactions per block, since the one megabyte limit only applies to their “witness-stripped” versions, which are smaller.
  • SegWit enables the Lightning Network, a second layer that runs on top of the basic blockchain layer, to hypothetically solve the scaling problem by allowing a practically unlimited number of instant, low-cost transactions to be carried out “off chain”.

SegWit is also enabled on Litecoin and some smaller cryptocurrencies .

Related GDPs

  • BIP141 Separated Witness (SegWit) - activated August 24, 2017
  • BIP142 Address format for separate witnesses - withdrawn, replaced by BIP 173
  • BIP143 Transaction Signature Verification for Version 0 Witness Program- activated August 24, 2017
  • BIP144 Segregated Witness (Peer Services) - activated August 24, 2017
  • BIP148 Mandatory activation of Segwit deployment - activated (mandatory activation of BIP141, 143, 144)
  • BIP173 Bech32 addresses - activated, not yet widely used

literature

  • Patrick Schüffel, Nikolaj Groeneweg, Rico Baldegg: The Crypto Encyclopedia: Coins, tokens and digital assets from A to Z . Friborg University of Economics / Growth Publisher, Friborg / Bern August 2019.

Web links

Individual evidence

  1. ↑ What is Segwit? | Bitcoin Austria. Retrieved January 20, 2018 (Austrian German).
  2. ↑ a b c bips: Bitcoin Improvement Proposals. Bitcoin, January 20, 2018, accessed January 20, 2018 .
  3. ↑ a b What the 'Bitcoin Bug' Means: A Guide to Transaction Malleability . In: CoinDesk . February 12, 2014 ( coindesk.com [accessed January 20, 2018]).
  4. ↑ Osi Momoh: SegWit (Segregated Witness) . In: Investopedia . May 3, 2017 ( investopedia.com [accessed January 20, 2018]).
  5. ↑ Protocol documentation - Bitcoin Wiki. Retrieved January 20, 2018 .
  6. ↑ How the Bitcoin protocol actually works | DDI. Retrieved January 20, 2018 (American English).
  7. ^ What is the block size limit. Retrieved January 20, 2018 .
  8. ↑ Lutpin: Are there SegWit alternatives? | Crypto-News.net. Retrieved January 20, 2018 (American English).
  9. ↑ Flexible Transactions. (No longer available online.) Archived from the original on October 18, 2017 ; accessed on January 20, 2018 .
  10. ↑ Transaction malleability - Bitcoin Wiki. Retrieved January 20, 2018 .
  11. ↑ Aaron van Werdenum: Segregated Witness, Part 1: How a Clever Hack Could Significantly Increase Bitcoin's Potential - Bitcoin Magazine. Retrieved January 20, 2018 .
  12. ↑ What is SegWit? Retrieved January 20, 2018 .
  13. ↑ Cryptocurrencies: Segwit is active in the Bitcoin blockchain - Golem.de . ( golem.de [accessed January 20, 2018]).
  14. ↑ Bitcoin: $ 4600, 50% Dominance, Forks Leave Altcoins No Room For Moon . In: Cointelegraph . ( cointelegraph.com [accessed January 20, 2018]).
  15. ↑ Top Secret? Bitcoin Scaling Plan Segwit2x Leaves More Questions Than Answers - CoinDesk . In: CoinDesk . June 23, 2017 ( coindesk.com [accessed January 20, 2018]).
  16. ^ Segregated Witness and the Possibility of Patent Infringement | Bitcoin.com. Retrieved August 28, 2018 (UK English).
  17. ↑ CoinDesk Explainer: How BIP 91 Enacts SegWit While Avoiding a Bitcoin Split - CoinDesk . In: CoinDesk . July 18, 2017 ( coindesk.com [accessed January 20, 2018]).
  18. ↑ heise online: Segwit 2x : Block size update for Bitcoin canceled. Retrieved January 20, 2018 (German).
  19. ↑ BIP 91 Locks In: What This Means for Bitcoin and Why It's Not Scaled Yet - CoinDesk . In: CoinDesk . July 21, 2017 ( coindesk.com [accessed January 20, 2018]).
  20. ↑ It's Official: Segregated Witness Will Activate on Bitcoin - CoinDesk . In: CoinDesk . August 8, 2017 ( coindesk.com [accessed January 20, 2018]).
  21. ^ Segregated Witness Benefits . In: Bitcoin Core . ( bitcoincore.org [accessed January 20, 2018]).
  22. ^ Luke Graham: As bitcoin comes off its record high, the next step is to avoid a 'lightning fork' . In: CNBC . August 9, 2017 ( cnbc.com [accessed January 20, 2018]).