SegWit
A Bitcoin protocol upgrade activated in August 2017 that fixed transaction malleability and increased effective block capacity. SegWit was a prerequisite for the Lightning Network and remains a core part of Bitcoin's current protocol.
SegWit, short for Segregated Witness, is a protocol upgrade to Bitcoin that was activated in August 2017. It addressed a longstanding technical issue called transaction malleability: a vulnerability that allowed the transaction ID to be altered before confirmation, which complicated the development of second-layer payment systems. SegWit fixed this by moving the signature data (the "witness") to a separate part of the transaction structure, outside of the data used to calculate the transaction ID.
SegWit also effectively increased Bitcoin's block capacity. By relocating signature data to a separate witness area and counting it differently toward the block size limit, more transactions could fit into each block. This helped reduce fees and network congestion without raising the raw block size limit, which had been the central point of contention in Bitcoin's block size debate — a period of significant community disagreement that led to several forks. SegWit was activated as a soft fork, meaning it was backward-compatible and did not require all nodes to upgrade immediately.
One of SegWit's most significant downstream effects was enabling the Lightning Network. The transaction malleability fix was a prerequisite for the payment channels that the Lightning Network relies on. Since its activation, SegWit adoption has grown steadily, and it remains a foundational part of Bitcoin's current protocol.