There is a new buzz word that is being dropped in an increasing frequency at Bitcoin forums and meet-ups. The word is SegWit. If you haven’t come across it, then there, I’ve dropped it.

Even if you hadn’t come across it through this blog post, I promise, you would have learnt about it somewhere else, anyway. It was just a matter of time, especially if you hang with a crowd that is keen on catching up with the trends in the Bitcoin space.

If you had already heard about it, then there is a possibility that you are still struggling to wrap your head around the concept.

Indeed, this article is meant to help you understand the basics of it. It is accurate to state that this is a short guide for folks who aren’t very technical savvy but always like it when they keep up with what is happening in the technical side of Bitcoin.

Therefore, this blog post is not about is a technical analysis of the Segregate Witness concept.

Short history of SegWit

SegWit is a concept that came into the focus of the larger Bitcoin community when Pieter Wuiller, one of Bitcoin lead developers, presented it at the second Bitcoin Scaling Conference on the 6th and 7th of December 2015 in Hong Kong.

The conference had brought together miners, entrepreneurs, developers and users of the Bitcoin network to chart a path to scaling its capacity.

Before this moment, the only ways many thought the Bitcoin network could be scaled was through increasing the block size, using Lightning and Sidechain technologies. Few imagined it could also be achieved the other way; shrinking the size of the transactions.

Needless to say, the need to scale is necessitated by the fact that the number of transactions per second is growing tremendously while the block in which the related data is recorded and propagated remains at 1mega byte (1MB).

With that out of the way, what is SegWit?

This is a combination of the short forms of the words ‘Segregated Witness.’

Unveiling of Segregated Witness

At the Hong Kong Scaling Conference, Pieter Wuille explained that the word ‘Segregated’ is used with the meaning of the word ‘separation’. On the other hand, the word ‘Witness’ stands for ‘Signature’. Therefore, Segregated Witness is simply means separation of signatures.

Andreas Antonopoulos has described it as one innovation that “marks the turning point for bitcoin.”

In essence, the idea is to remove signatures from transaction data that is recorded and carried in Bitcoin blocks.

Think of a Bitcoin block as a passenger train. It can carry up to a given number of travelers and their luggage. Suppose the train company wants to reduce the cost of operation by increasing capacity to carry passengers.

It could attach more passenger cars to the train to scale capacity. But that is not the only way. It could also turn baggage compartment into passenger areas and have the all the luggage transported separately.

Breathing room to consult further

That is what the SegWit proposal is designed to do. In this case, signatures data is the luggage to be transmitted separately from the transaction data. That way room is created in the Bitcoin block to carry more transactions.

Indeed, Dr. Wuille and other developers working on this project have asserted that this will decrease the size of each transaction by close to 40% and thus creating room in the bitcoin block by about the same margin.

Some in the Bitcoin community are however not convinced that is an answer to the problem of scaling.

“Even with Segregated Witness, the network will reach a point where it needs to scale again,” Jacob Donnelly has opined in an article published by Bitcoin Magazine, “Compressing data can only work so much.”

Nevertheless, most acknowledge that scaling using SegWit will give the community the much needed time to find consensus on the ultimate scaling solution.