A Bitcoin Improvement Proposal (BIP) that aimed to fix transaction malleability on Bitcoin.
SegWit was activated in August 2017 after being put forward by Bitcoin developer Peter Wiulle during a Scaling Bitcoin conference in 2015. Its literal meaning is “segregation of transaction signatures” and the implemented update created the idea of UASF, which means user-activated soft fork.
To speed up confirmations, SegWit modifies the mechanism to not include signatures, which form 60% of a transaction.
It also provides a security fix, as the input transaction ID could be modified to fraudulently receive Bitcoin from the sender. Since the signature is moved essentially to the end of the transaction, the transaction identity can’t be tampered with.
A further SegWit proposal called SegWit2x aimed to not only change transaction batching, but also increase Bitcoin’s block size from 1MB to 2MB. However, as SegWit2x required a hard fork and was a more fundamental change to the Bitcoin protocol, the developer community could not reach consensus and ultimately the proposal was abandoned.
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