Prior to the controversial change of the Bitcoin code in 2017, this issue was heavily debated for over two years with some of the community members blatantly refusing this code change. Although it has been done, many of the community members are still not in support of this advancement. Also, most people do not understand the technical workings of this change, thus why we would have to take a closer look at this Bitcoin protocol adaptation which led to the hard fork of the Bitcoin Cash.
The change of the Bitcoin code which is actually the biggest change the Bitcoin software has seen was proposed initially by Pieter Wuille, who was as of 2015 one of the Bitcoin Core facilitators. This proposed change was made as a compromise to the scaling issue that plagued the Bitcoin network. For a long time, the Bitcoin network has been faced with the scalability issue which made the verification of transactions on the network take longer periods of time than expected. Various proposals and solutions were presented to help solve this problem and the implementation of Segwit, as well as the lightning network was one of these solutions. Several Bitcoin community members like the top mining firm Bitmain was accused of refusing the Segwit proposal because it wanted to boost its revenue. Other miners and mining groups blocked the Segwit proposal as well.
The Segwit (Segregated Witness) was first launched to solve not the scalability issue of the Bitcoin network. It was developed to solve the “malleability” problem of the Bitcoin network. This little problem or flaw on the network allowed for users on the network to change the transaction details and are capable of modifying the transaction ID. Although this was not the main problem that faced the network, it prevented the development of certain complex features such as the second layer protocol as well as smart contracts. Segregated Witness solved this problem by removing the “signature” which was otherwise known as witness information, then storing it outside of the transaction block. This allowed blocks on the Bitcoin network to become smaller in size and thus fit more transactions into a single block.
To solve the Bitcoin scaling problem, the Segwit solution presented a concept called the “block weight”. This was basically a combination of two functional systems. It is the combination of the block size without and with the data cap, while the Bitcoin transaction base size still remains 1 MB. This means that the Segwit is perfectly compatible with the previous protocol, thus there was no need for a hard fork. Basically, Segwit does not necessarily increase the Bitcoin network block size. Instead, what it does is enable a larger number of transactions within the 1MB block size.
With the malleability issue solved, second layer protocols such as Lightning Network have been developed on the Bitcoin network. Let us look at what Segwit would do for the Bitcoin network: