What Is SegWit?
SegWit, segregated witness, is the 2017 Bitcoin upgrade that moved signature data to a separate part of the transaction. It was a soft fork, so old nodes could keep running. The practical results: a class of bugs called transaction malleability went away, more transfers fit in a block, and the door opened for the Lightning Network.
How It Actually Works
- Signatures used to sit inside the transaction body. Moving them out meant the transaction ID no longer changed if a signature was tweaked, which had broken some contract designs and Lightning's building blocks.
- Witness data is discounted in the block-weight math, so a typical payment uses less of the block. Fees per payment fell relative to the old format, which is why wallets pushed native SegWit addresses (bc1...).
- You do not "buy SegWit." Your wallet either sends a SegWit payment or it does not. Modern wallets default to it.
Risks and Common Mistakes
- Sending to an address type your exchange cannot withdraw from. Most large venues caught up years ago. Tiny or ancient platforms sometimes did not.
- Thinking SegWit is a new coin. It is a format. Same bitcoin, different wrapper. The 2017 drama produced Bitcoin Cash as a competing fork, which is a different story.
When It Matters
Reading fee charts, understanding why your address starts with bc1, and any Lightning setup. Taproot is the later upgrade that sits on top of this one.
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