Segwit Reading Assignment

[cryptopowers]

What was a proposed alternative to Segwit?

    Increasing the block size an the alternative to Segwit. This lead to the creation

of Bitcoin Cash

What did Segwit solve more than just the scaling issue?

    Yes, it fixed a bug called transaction malleability that allowed someone to change small details which then modified the transaction Id, and the hash.


How is Segwit and the Lightning network connected?

    The malleability fix allows second layer protocols like the Lightning Network. The fix allowed easier designs for features that rely of unconfirmed transactions since the transaction Id can not longer be changed. The Lightning Network would not be possible;e without this change for Bitcoin


Are people, wallets and other services forced to use Segwit?

    No some wallets have yet to add Segwit support. At this time 40% of Bitcoin transaction use the Segwit fix

[Gemstar]

1 An proposed alternative to Segwit was to increase block size limit.

2 Apart from scalability problem, Segwit also solved transaction malleability issue that prevented the development of more complex features such as second-layer protocols and smart contracts, which result to lower fees and increase network security. And since it is compatible with the previous protocol, it avoids the need for a hard fork.

3 Segwit-Lightning network connection: With Malleability fix, Segwit supported the development of second layer protocols on which the lightening network was built, thereby making any feature that relied on unconfirmed transactions less risky and easier to design.

4 Although people, wallets and other services are not forced to use Segwit, it would be beneficial to add this support protocol as a greater number of transactions in the block would reduce (bitcoin) fees.

[Keith]

1. A proposed alternative to Segwit was an increase in the block size to allow more transactions into the block without changing the transaction structure. This proposal resulted in the creation of a fork of the main bitcoin chain and the creation of Bitcoin Cash.

2. Segwit solved the issue of transaction malleability, where data within the transaction could be changed creating a different hash for the transaction without altering the core components of the transaction. The receiver of the transaction could falsely claim non receipt of the transaction.

3. Segwit was necessary for the lightning network because it eliminated the possibility of transaction malleability.

4. People, wallets etc. are not forced to use Segwit but a quick search of internet articles report the percentage of Segwit transactions Q42019 at around 60% with over 80% of blocks mined during 2019 over 1MB due to Segwit.

Question: What secures the signatures separated from the transactions? They must be linked to the transaction ids but what prevents the signature being altered from claiming ownership of another transaction. Or perhaps the signatures just being destroyed to invalidate proof of transactions?

[strenev]

1. A proposed alternative to Segwit was increasing the block size
2. Apart from the scaling issue, Segwit fixes the problem with transaction malleability.
3. The activation of Segwit would support the development of second layer networks such as the Lightning network
4. No, they are not forced to use Segwit, however it would benefit everyone.

[Steffen]

B-Cash (bigger blocks instead of new txn structure (SegWit))

transaction malleability:
signatures are not anymore part of the hash-input. (this reduces space)
A Tx-ID-hash would not change if different signatures were used.

-SegWit opens the opportunity for second layer protocols like Lightning.
(possibility for off chain intermediate memory to store transactions until “users/(miners?)” are ready)
4)
so there is at minimum an incentive to switch to Segwit:
"As more wallets embrace the upgrade, the percentage of transactions
that use the SegWit structure will increase, and bitcoin fees should
drop as blocks contain a greater number of transactions…+lightning and other second layer protocols "

[Yir]

1. What was a proposed alternative to Segwit?
   To increase the block size limit from 1MB TO 4MB.
   . To fix a bug in the bitcoin code called transaction malleability.

2. What did Segwit solve more than just the scaling issue?
   SegWit fixed transaction malleability by removing the signature information (otherwise known as the “witness” information) and storing it outside the base transaction block. With that, signatures and scripts can be changed without affecting the transaction ID

3. How is Segwit and the Lightning network connected?

   SegWit is the foundation for the Lightning Network. By eliminating the possibility for transaction
   malleability, secure payment channels can be created that will eventually allow the Bitcoin network to
   process millions of transactions per second.
   SegWit and the Lightning Network together will allow Bitcoin to process millions (or more)
   transactions per second.

4. Are people, wallets and other services forced to use Segwit?

   No.
   Resistance to SegWit was one of the factors behind the development of bitcoin cash, a fork of the
   bitcoin network which chose to implement a larger block size limit rather than rely on a new
   transaction structure.

[Alko89]

@Steffen

“users/(miners?)” are ready

The users on the Lightning network are considered as two parties that open a channel and create a time locking transaction which locks the bitcoin until they close it and get the corresponding coins on their main wallets.
You can learn more about it in our Lightning course

[Mauro]

No problem Jay. Sorry for a bit of a later reply. Keep up the great work.

[Mauro]

@cryptomarls

A2. Segwit made it possible to support the development of second layer protocols, such as lightning.

@Lacho

2. What did Segwit solve more than just the scaling issue?
Without the signature information , the transaction weigh much less. (Block weigh)
Second layer protocol.

How did segwit made the second layer solution possible? There is one important thing that segwit fixed. It has something to do with the unconfirmed transactions being made more secure. Do you think you could figure out what it was? If you do need any help, feel free to look at other students answers.

[Mauro]

@CocoaCrypto

But my questions here are: What exactly is a second layer protocol? AND In the following sentence: “The lightning network will further boost bitcoin’s transaction capacity by taking frequent, small transactions off-chain, only settling on the bitcoin blockchain when the users are ready.” What dictates when the users are ready?? What does that mean?

It means that we can create a channel between me and you. The channel will have a certain capacity. Let’s say we create a channel of 1 bitcoin between you and me. To create a channel we must broadcast it to the main chain. Since we created a channel of 1 bitcoin, we can’t transact more than that amount. After that, every transaction you and me do will not be recorded on the chain, meaning it will happen fast and with not fees. This allows us to transact thousands of times. Only after we conclude our business is where we will announce back everything to the main chain.

[Mengxiong1024]

1. To proposed alternative to Segwit was to increase the block size. That became Bitcoin Cash.

2. By removing the Signature data in the tx and storing it somewhere else, the reciever of the tx can no longer alter the signature to change the tx ID. Nore more malleability.

3. Segwit allows for second-layer solutions. Lightning Network is a second-layer protocol that manages BTC tx offine to make tx more scalable.

4. No, people, wallets, and other services are not forced to use Segwit. They can choose to use it or not, up to them.

[Mauro]

@CocoaCrypto

4- It seems as though Segwit is a soft fork, which means that everyone will only have to use it if the majority rule… which it seems like they haven’t as of the time of the article!

You are never forced to accept a soft fork, even if the majority accepts it. Its a contraction of the rules, meaning that an older node will always be compatible with the new ones. Hope that makes sense.

[Mauro]

@Gunnar.Lovett

Lightning processes transactions before they are confirmed?

Yes. Only after the channels get closed is when the transaction is confirmed on chain.

[Mauro]

@MEC

If you want to continue transacting on the bitcoin network, you must adopt segwit, it is a soft fork.

You don’t have to adopt segwit in order to use the bitcoin network. Legacy transaction are still allowed. Soft forks are updates that are compatible with all older nodes.

[Mauro]

@cryptologos

3. Segwit allows for a second layer solution such as the Lightning Network to accept many more transactions quickly by removing signature data from the transaction, making it possible for more transactions to be sent per block, by removing this to an area outside the block.

Lightning network works as a second layer. It enables users to create channels in which they can transact in very high amount with practically no fees. The final balance won’t be confirmed on the chain until the channels get closed.

[Mauro]

@LuMpY7

3.) Really not covered well in the material. However, I recall a comment about layers for smart contracts. Other than that I would have to google this or be directed to the video and minute it was discussed in the lesson.

I am sorry you felt that way. Let me help you. Since lightning network relies on the unconfirmed transaction we first had to solve the problem with the transaction malleability. This was done with the help of the soft fork we know as Segwit. Segwit made unconfirmed transaction much more secure. This means that the segwit soft fork enabled us to have a second layer solution like lightning network possible in the first place. That’s the connection. If you ever feel the need for help feel free to message me or any of the other forum moderators. We are here for you.

[CocoaCrypto]

Wow! OK, very interesting use case!
Thank you for the explanation!

[MEC]

Thanks for your response, that was definitely one of my least confident answers. I understand now, thanks for the explanation.

[CryptoSho]

Homework segwit

1. Making block size bigger was the alternative proposed instead of segwit.

2. Fixing a bug in malleability allowing transaction IDs to be moved off chain increasing space on chain for more transactions.

3. By fixing the bug in the code it allowed the lightning network to be added as a second layer solution.

4. It was a major topic of discussion on how to implement Segwit. Since they figured out how to implement it through a soft fork not everyone is required to upgrade. Over time most wallets will be upgraded.

[claudiorox]

1 : The hard fork to bitcoin cash. Where the blocks can fit up to 8 MB of data without having to change the way TXID’s hash is created.

2: It fixed a security issue with TX malleability. Where scammers could change the TX signatures in a block, getting a totally different TXID hash. And they could claim that they never received some bitcoins.

3: Segwit implementation allowed for the development of the lightning network protocol. A protocol that works on top of bitcoin, and make possible fast and cheap transactions.

4: No, currently the number of bitcoin users who adopt segwit is at 45 %