The SegWit or Segregated Witness is a soft fork based update to the Bitcoin protocol which addresses some weaknesses such as throughput and security in the Bitcoin protocol.
SegWit offers a number of improvements as listed here: Fix for transaction malleability due to the separation of signature data from transactional data.
Bitcoin’s Solution to Slow and Expensive Transactions
In this case, it is no longer possible to modify transaction ID because it is no longer calculated based on the signature data present within the transaction.
Reduction in transaction size results in cheaper transaction fees.
Reduction in transaction signing and verification times, which results in faster transactions.
Script versioning, which allows version number to be prefixed to locking scripts.
This change can result in improvements in the scripting language without requiring a hard fork and by just increasing the version number of the script.
SegWit was proposed in BIP 141, BIP 143, BIP 144 and BIP 145.
Why This Matters for Blockchain Technology
It has been activated on Bitcoin main network on August 24, 2017.
The key idea behind SegWit is the separation of signature data from transaction data, which results in reduced size of the transaction.
Instead of hard size limit of 1 MB blocks, SegWit has introduced a new concept of block weight limit.
To spend an Unspent Transaction Output (UTXO) in Bitcoin, it needs a valid signature to be provided.
Key Points to Remember
- Segregated Witness (SegWit) The SegWit or Segregated Witness is a soft fork based update to the Bitcoin protocol which addresses some weaknesses such as throughput and security in the Bitcoin protocol.
- SegWit offers a number of improvements as listed here: Fix for transaction malleability due to the separation of signature data from transactional data.
- In this case, it is no longer possible to modify transaction ID because it is no longer calculated based on the signature data present within the transaction.
- Reduction in transaction size results in cheaper transaction fees.
Going Deeper: Advanced Concepts
In the pre-SegWit scenario, this signature is provided within the locking script whereas in SegWit this signature is not part of the transaction and is provided separately.
There are two types of transaction that can now be constructed using SegWit wallets but note that these are not new transaction types as such, these are just new ways by which UTXOs can be spent.
These types are: Pay to Witness public key hash (P2WPKH) Pay to Witness Script hash (P2WSH)
Conclusion
Segregated Witness (SegWit) represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.