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Segregated Witness (SegWit)

Segregated Witness (SegWit) is an architectural change that was activated on August 2017 as a soft fork on the Bitcoin network (it is backwards compatible with users who have not accepted the new rules). This change is designed to increase security and efficiency. SegWit splits transactions into two segments, and removes the unlocking signature (witness data) of transactions from the scriptSig (unlocking script) field of a transaction into a separate witness data structure included at the end of a transaction.

SegWit fixes transaction malleability – a weakness that would allow a malicious actor to modify (“malleate”) the “witness data” of a transaction before it is confirmed, in such a way that it changes the transaction ID, with an intended goal to defraud a sender into sending a second payment after the first did not appear to be confirmed. By moving the witness outside the transaction, the transaction hash used as an identifier no longer includes the witness data.

SegWit increases block capacity (from 1MB to a max 4MB) since more transactions can now fit into a block after removing the witness data. As a result, transaction fees decrease and it is safer to implement payment channels such as the Lightning Network.

Note: These are non-technical definitions meant for a general audience and should not be used as legal definition
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