Updated at 1:40pm EST:

Segregated Witness has been merged into Bitcoin Core.

Original article:

During a Bitcoin Core development meeting on Thursday, it was decided that the code for Segregated Witness (SegWit) is ready to be merged into the master branch. According to Bitcoin Core contributor Eric Lombrozo, the merge is expected to take place in the coming days.

Why This Is a Big Deal

Segregated Witness is an improvement to the Bitcoin protocol that enables a variety of new features and enhancements to the network. Much of the Bitcoin community is excited about this change due to its effective increase to the Bitcoin block size limit to roughly 1.7 megabytes.

In addition to the effective block size limit increase, there are also a multitude of other advantages associated with this protocol change. Segregated Witness fixes the well-known transaction malleability issue, which was infamously blamed by former Mt. Gox CEO Mark Karpeles for the loss of user funds. A fix for this longstanding bug in the Bitcoin protocol is also required for the Lightning Network, perhaps Bitcoin’s most promising scaling solution, to function properly.

More recently, Bitcoin Core contributor Johnson Lau discussed how SegWit makes it much easier and safer to enable new and old opcodes in Bitcoin. These newly enabled opcodes can offer more flexibility in terms of how funds can be sent on the Bitcoin network. Trust-free betting, atomic cross-blockchain exchange, and a more robust system for multisignature addresses are three examples of new features Lau is attempting to bring to Bitcoin via new opcodes.

In terms of why Segregated Witness is a big deal, Lombrozo told Bitcoin Magazine:

“SegWit represents the most significant improvement to the Bitcoin protocol to date, solving several problems with the protocol’s original design and adding an extensibility layer atop Bitcoin to support larger scale and more sophisticated smart contract applications.”

Code Will Not Be Active in 0.13 Release

Although Segregated Witness code is expected to be merged into Bitcoin Core in the coming days, it will not be activated on the network until some later date. SegWit code will be included in the upcoming 0.13 release of Bitcoin Core; however, the code that allows miners to signal their support for the protocol change (and activate it once 95 percent of miners are on board) will be included in a later release ‒ likely Bitcoin Core 0.13.1.

According to Lombrozo, there are two reasons for merging SegWit code without activation parameters. First, it will allow greater testing and review to take place among a larger group of Bitcoin enthusiasts, although SegWit is already active on testnet. Second, the Bitcoin Core contributors will not have to keep rebasing SegWit, which requires developers to retest and review a bunch of code any time something is merged that could conflict with this upcoming protocol change.

Path Toward Activation Is Unclear

Although the code for Segregated Witness will soon be merged, activation may take some time. Bitmain CEO Jihan Wu recently told Bitcoin Magazine that Antpool (a mining pool operated by Bitmain) will not run Segregated Witness code without also having a hard-forking increase in the block size limit included in a release of Bitcoin Core. Antpool represented 18 percent of the network hashrate at the time of this writing.

Segregated Witness is a soft fork that activates only after 95 percent of the miners have signaled their support for the change. While the development aspect of the SegWit rollout process appears to be nearly over, there still is work to be done on figuring out how this change will be activated in a timely manner.

When asked about the possible issues with activation, Lombrozo responded, “Let’s worry about this after the merge.”