Last Updated: 25 August 2022
The day 23 August has passed quietly. Bitcoin veterans should hear a bell ring when they hear this date.
SegWit soft fork
Five years ago, around block 481,824, the penultimate major software update was activated in Bitcoin Core—SegWit. It was a historic moment in the development of bitcoin. Instead of larger blocks, bitcoin took the path of a secondary layer of scalability—lightning.
Happy Bitcoin Independence Day!
Today marks the fifth anniversary of Bitcoin users' plan to deploy a software upgrade through BIP148, marking a community-based victory in the years-long Blocksize War by activating SegWit.
More about Bitcoin's history 👇https://t.co/hY8K2xJX2J
— River Financial (@River) August 1, 2022
Meanwhile, 85% of all bitcoin transactions use a SegWit address. A very successful improvement to the protocol. But what is SegWit again?
SegWit stands for Segregated Witness. In short, it is another way of getting a bitcoin payment into a block, separating part of the transaction (namely the digital signature) from the information that must be included in the blockchain.
The block size is 1 MB but can optionally increase to larger blocks (up to even 4 MB). For example, earlier this month, a block of 2.77 MB was added to the blockchain. But please note: this is optional, as SegWit is a softfork.
With the arrival of SegWit, the lightning network could also be set up. This was an essential step, as bitcoin ran into its limits in terms of scalability in 2017. Payments became expensive and/or slow.
Thanks to SegWit, the don’t trust, verify mantra remained more realistic for the long term. Larger blocks could undermine the verifiability of the bitcoin blockchain which, in turn, could affect the decentralisation of the entire network.
On 1 August this month, bitcoin also celebrated Independence Day, which is related to this same theme. At the time, nodes showed that it is not the miners who are in charge of the bitcoin software but the users. The SegWit2X update proposed by the New York Agreement was blocked.