1. What is SegWit?

SegWit — or Segregated Witness — is the name given to a Bitcoin (BTC) protocol upgrade, which was implemented on Aug. 23, 2017.

As in any decentralized blockchain, if Bitcoin’s algorithm needs updating, it’s up to the Bitcoin developers and contributors to agree on how and when to make changes together. Completed in this way, the SegWit protocol upgrade was designed to help Bitcoin scale and fix some bugs that represented a risk to its trustless characteristic. SegWit is most known for the way it updates how data is stored on Bitcoin’s blockchain.

Protocol updates like SegWit are an occasional reality for decentralized projects like Bitcoin and are unique to the blockchain space. For a centralized financial product, if the math behind it needs tweaking, an administrator or authority can simply make a unilateral change. Bitcoin, which exists because people support it remotely from around the world, must instead fork in new directions when enough users agree to update their software in the same manner.