If one proposal excited attendees at the recent Scaling Bitcoin workshop in Hong Kong, Bitcoin Core and Blockstream developer Dr. Pieter Wuille’s Segregated Witness was it. Praised by many within the technical community, Segregated Witness is expected to improve Bitcoin’s performance in a number of ways, while some even hope it might be the scaling solution that helps bring some peace back to the Bitcoin community.
The first part of our three-part Segregated Witness series covered how it works. In this second part: What it does.
Increasing the Effective Block Size Without Increasing the Block-size Limit
The benefit of Wuille’s Segregated Witness proposal that has perhaps drawn most attention, is that the removal of signatures from 1 megabyte blocks could effectively increase Bitcoin’s block size. This means more transactions per second can be recorded on the blockchain, or in other words, it would allow for a higher transaction throughput. It could do so, moreover, without breaking any of the existing consensus rules – including the block size limit.
Wuille’s proposal does introduce a new type of maximum block size. The formula used to calculate this limit is set somewhat arbitrarily: A block without the Segregated Witnesses, plus a quarter of the Segregated Witnesses, must not exceed 1 megabyte. As such, all blocks will seem smaller than 1 megabyte to old nodes, since a quarter of the Segregated Witness (which they don’t see) needs to fit in that same 1 megabyte. New nodes will meanwhile see blocks that exceed 1 megabyte, since the actual size of the Segregated Witness is larger than the quarter accounted for.
The exact amount of additional space Segregated Witness opens up depends on the types of transactions new blocks include. If more transactions store more data in the Segregated Witness, as multisig transactions would do, the total […]
