SegWit, is an acronym of Segregated Witness. In other words, an applied protocol upgrade which protects the users during transactions and aims to increase the block capacity.
SegWit separates the witness from the list of entries. The witness contains the data necessary to check the validity of the transactions, but does not determine the effects of the transactions. The new weight parameter is also defined and blocks are allowed to have a maximum of 4 million weight units (WU). Non-witness and pre-section witness bytes weigh 4 WU. However each byte of SegWit witness data weighs only 1 WU and allows blocks larger than 1 MB unless there is a strong change.
SegWit enhances the Bitcoin usage and logs in a number of errors. You can find the main features of SegWit described in more details below:
SegWit doubles the capacity of the Bitcoin network.
Many people declare that SegWit does not increase the block size,
but in fact; it provides an increase in the block size.
For instance, in January 2018, we see that there is a Bitcoin block that is 2,177 KB in size, which is larger than 1 MB.
SegWit addresses a major issue in the Bitcoin protocol that allows users to change their transaction IDs; in addition to increasing theBitcoin block capacity.
Prior to SegWit, the transaction ID (your digital signature) can be updated with a change in the unlock code. After you have signed your transaction digitally; the Bitcoin encryption is sent via the hash function, resulting in a unique transaction ID for your transfers. If you change even a character in the digital signature, it will result in a completely different process ID. SegWit moves the signature to the end of the transaction in order to generate the Transaction ID correctly.
For this reason, this change makes it impossible to change the Process ID - if malicious nodes could change the Process IDs in any way, the Lightning Network would have been impossible.
In the last years, the use of SegWit has increased immensely. It has been announced that approximately 46% of all Bitcoin transactions actually use SegWit addresses.
In terms of the market value up until today, the best encrypted currency is definitely Bitcoin. Despite all the cryticisms regarding Bitcoin and the usage among the people; it is important to remember that Bitcoin can only perform 7-10 operations per second on the base layer. In addition to this revolutionary finding, the underlying technology of Bitcoin has also become one of Bitcoin's biggest challenge.
Nonetheless, the distinguished developers in the Bitcoin community are working hard in order to develop a solution to this problem. SegWit and Lightning Network will eventually allow Bitcoin to perform millions (or more) transactions per second.