(
SEGregated
WITness) An architecture that improves the efficiency of a cryptocurrency network. Used in the Litecoin network and adopted by Bitcoin in August 2017, SegWit moves the digital signatures (the witnesses) to a separate data structure (a separate Merkle tree). They are not part of the cryptographic hash of the transactions. With SegWit, blocks are also larger (up to 4MB).
To save storage space, the witness data can be ignored by nodes that do simplified payment verification (see
SPV). Versioning was added to transaction scripts so they can be identified when upgraded, and the verification of digital signatures was optimized. In addition, all coin balances (inputs) used in a transaction are contained in the SegWit digital signatures, thus streamlining operations of hardware wallets that previously had to collect additional data.
All early Bitcoin transaction formats are compatible with SegWit (see
Bitcoin transaction) because SegWit is a "soft fork," and wallets and exchanges did not have to comply immediately. SegWit2x was another approach that proposed splitting Bitcoin after SegWit but it was cancelled in November 2017. See
Bitcoin,
Bitcoin Cash and
blockchain.