Science | This technology escorts two-thirds of Bitcoin transactions

On January 6, according to foreign media news, the adoption rate of SegWit technology (segregated witness) in bitcoin transactions has exceeded 66%. In other words, nearly two-thirds of Bitcoin transactions are now conducted under the escorting of the Segregated Witness technology.

According to SegWit.Space (specially monitoring the adoption of Segregated Witness), as of press time, the application of Segregated Witness in Bitcoin transactions accounted for 63.83%.

In addition, from the overall situation of Bitcoin trading using Segregated Witness, since the technology was released in 2017, three application promotion nodes have appeared, located in October 2017, February 2018, and September 2019. Correspondingly, the application proportion of Segregated Witness has reached the thresholds of 10%, 30%, and 50%, respectively. The growing number of transactions using the Segregated Witness technology on the Bitcoin network is ample evidence that users and institutions are continuing to increase their acceptance.

"origin"

On August 24, 2017, when the Bitcoin network reached the 481824 block, its segregated witness was officially activated. Before this situation appeared, there was still a story about the struggle between technology and interests.

In the Bitcoin blockchain network, the size of each block is 1M. However, such capacity is obviously unable to cope with the increasing transaction volume of Bitcoin. Therefore, the problem of Bitcoin transaction congestion has begun to become a problem in the field of blockchain network optimization.

As a bitcoin community organization that performs code updates and maintenance, the core team proposes that to solve the congestion problem of the bitcoin network, the Lightning Network needs to be imported, and segregated witness must be introduced before this. In this way, the congestion of the Bitcoin network can be alleviated without a hard fork, that is, without generating new coins.

However, to implement this plan concretely, most miners involved in Bitcoin mining need approval. As the world's largest mining machine manufacturer, Bitmain has the largest mining pool and mine at that time, and its computing power share is closer to 1/2 of the entire Bitcoin network.

Therefore, whether Segregated Witness can be implemented depends on whether the computing power held by Bitmain participates in support. However, real problems still arise. After analysis and calculations, if Segregated Witness is successfully deployed, then the miner's income in terms of transaction fees will decline significantly. Therefore, Bitmain's attitude towards Segregated Witness is not positive.

Later, Bitmain proposed another solution, which is to directly expand the capacity of the block, from 1M to 8M. With the substantial change in block size, the congestion problem is naturally solved. However, this move involves changes to the original parameters of the Bitcoin network. Once the entire network is implemented, a hard fork will be unavoidable and new coins will appear.

Not only that, the block size has increased to eight times the original, which means that the size of the new Bitcoin network will be larger, and many small nodes will not be able to store the complete data ledger at that time, and Bitmain will of course harvest the complete ledger storage right. Such a centralized tendency has aroused strong opposition from the core team.

After repeated arguments, in the end, on May 23, 2017, the "SW + 2M" Bitcoin protocol upgrade plan was finalized. As a result, Bitmain successfully implemented a hard fork of the Bitcoin network, and the new coin BCC came out. At the same time, Segregated Witness was also grounded.

"Advantage"

Strictly speaking, Segregated Witness is an upgrade protocol whose main function is to expand the actual available capacity of the block. The Bitcoin network validates the transaction data of new blocks every 10 minutes. Before the adoption of Segregated Witness, the Bitcoin network processed about 7 transactions per second, which is far less than the general payment scheme.

The main method of segregated witness is to use the "isolated" method to separate the signature verification data from the transaction data, so that the transaction data becomes the main capacity occupant, thereby increasing the transaction throughput in disguise.

When the Bitcoin network generated the 481824 block, the Segregated Witness upgrade protocol was formally implemented as a soft fork compatible with the original parameters. So, what are its main advantages?

Increase block capacity

In a transaction, the sender must use a digital signature to prove that the asset has been transferred. However, the signature data will occupy up to 65% of the space of a block. At this time, only about 1/3 of the space is left for transaction data. With Segregated Witness, the signature data is removed, thus freeing up 2/3 of the available space. Therefore, the actual available block size has changed from 1M to about 3M.

2. Increase transaction speed

Because Segregated Witness expands the available space by about 2 times without increasing the original size of the block, the transaction speed of Bitcoin has been correspondingly increased. With the same block production time, the transaction throughput of each block will increase as the amount of transaction data that can be carried in each block increases.

3. Reduce transaction costs

With the increase of transaction speed, the transaction cost of the Bitcoin network has been greatly reduced. According to statistics, before the implementation of segregated witness, the cost of a single transaction was more than $ 30. However, after Segregated Witness was enabled, the cost of a single transaction has been significantly reduced to $ 1.

Faced with such an attractive advantage, there are endless streams of cryptocurrency wallet merchants, exchanges, etc. that Segregated Witness collects and integrates. In 2018, wallet cores such as Bitcoin Core, Coinomi, Bither, BRD, and Mycelium have announced their support for Segregated Witness; exchanges Coinbase, Bitfinex, Xapo, etc. have also introduced them. Recently, BitMEX, the world's largest cryptocurrency derivatives trading platform, has also added support for Segregated Witness.

In fact, Litecoin was the first to implement Segregated Witness before Bitcoin. As a result, it set a new high in three years and a record of more than three times the cumulative increase in 36 days.

It is believed that as more and more cryptocurrency networks introduce Segregated Witness, and more industry organizations support Segregated Witness, the cryptocurrency and even the blockchain industry will benefit from this and get a wider opportunity for popularization.