Segwit Reading Assignment

[Mauro]

@dbeelow0323

Lightcoin is another layer on top.

You mean lightning network?

[cryptomarls]

It made transactions more secure by removing the signature. Transactions could take place quicker and the recipient would be unable to change or alter the TxiD, this fixed the malleability issue.

[Knut1]

1. Increasing the block size

2. it also fixed the malleability issue.

3. Segwit made it much easier to implement second layer protocols. the lightning network relies on off chain transactions which would not be possible with the malleability issue.

4. No it is a soft fork meaning it is still possible to follow the old rules. The update contracts the rules.

[Mauro]

That’s it. Keep up the great work.

[Naz]

1. To increase the block size (more Byte space); thus, changing the bitcoin protocol’s rule of block <=1MB.

2. By removing the scriptSig/witness data from the TX data structure, the input data of the for the TX hash (the TX’s unique ID); Segwit solved also the TX malleability problem, since changing the scriptSig/witness data will no longer affect the TX hash/TX ID.

3. By separating the TX’s scriptSig/witness data from the TX data structure; thus, stopping TX malleability, Segwit enabled the second layer protocol Lightning network to develop and operate with less risk, since it handles small unconfirmed TXs off-chain, recording the final settlement of these TXs on the bitcoin blockchain when settled by the users.

4. No, they are not. The Segwit update is a softfork (majority consensus); thus, it’s up to the remaining nodes, wallets and other services to update at will. Consequently, slowing down a larger adoption of the Lightning network and implementation of other solutions, like enabling bitcoin smart contracts and addressing anonymity.

[paul0]

1. What was a proposed alternative to Segwit?
   The alternative was to increase the block size limit to 2MB. But that would only be a temporary fix as overtime this new 2MB limit would be reached again and would require another increase to the block size.
   Another issue with increasing block size is that miners would require faster and more expensive hardware and faster internet connection to propagate the block. With these cost increase, smaller miners may not have enough capital to participate and would lead to less decentralisation.
   Larger blocks also increase propagation time which leads to more stale blocks and fork.

2. What did Segwit solve more than just the scaling issue?
   Segwit also fixed the transaction malleability vulnerability by removing signatures from transactions and storing signatures separately.
   The TX block size remains 1MB and TX+signature is capped at 4MB.
   Therefore it remains compatible with the previous protocol rule of 1MB block size limit.
   Is a soft fork.

3. How is Segwit and the Lightning network connected?
   By fixing the transaction malleability vulnerability, Segwit makes second layer protocols which rely on unconfirmed tx less risky.

4. Are people, wallets and other services forced to use Segwit?
   Because it is a soft fork, no one is forced to use Segwit. However, the advantages of Segwit should lead to a majority adoption.

[LoneWolf_Moonboy]

1. Larger blocks
2. Malleability
3. by segwit supporting development of second layer protocols
4. NO

[AlexMichaels]

1. What was a proposed alternative to Segwit?

The proposed alternative to Segwit (or Segregated Witness) was an increase in the size of transaction blocks so that they would be larger than 1 MB and therefore be able to hold more transactions in each block. This would be one way of (at least temporarily) solving the problem “of full blocks” that would eventually lead to an impediment of adoption (with a growing mempool, slower transactions and higher fees). However this would have meant a hardfork (since it would make previously invalid blocks valid) and this is the solution that in the end led to Bitcoin Cash and a degree of division in the community.

2. What did Segwit solve more than just the scaling issue?

Segwit also solves the problem of transaction malleability by removing the signature data from the transaction block and storing it separately (I.e. there was a cap on the transaction data at 4 MB however the transaction block itself would remain at 1 MB as it would not include the signature data in transaction block itself) meaning that the hash of the data within a Tx block would no longer be changeable by altering the signature data (or scripsig). The means that if the recipient of a transaction subsequently tried to alter the scripsig such that the sender could no longer verify that they had indeed send the transaction, this would no longer be a viable attack - since the transaction ID would now remain intact (& thereby eliminate this as a means of fraudulently obtaining more BTC).

Furthermore, Segwit supports the development of second layer protocols.

3. How is Segwit and the Lightning network connected?

One example of second layer protocols being facilitated by Segwit is the lightning network.

The removal of transaction malleability made it less risky and easier to introduce features that relied on unconfirmed transactions & allowing certain transactions to be taken off chain (then settled on chain at users’ discretion).

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

Not all network participants are forced to use Segwit. For example there are smaller nodes that do not store the signature data separately (in the proposed data structude with a block weight of 4 MB) and instead just store the transaction blocks / ID’s and query a larger node to verify that the signatures are valid.

In other examples during the early migration phases, it took many entities (even large ones like Coinbase) significantly longer to implement the new protocol.

Because it is a soft fork solution, Segwit makes previously invalid blocks valid - but not vice versa. However, in the interests of the network and higher throughout capacity for Bitcoin, as well as lower fees and lower mining and transaction costs, you would expect by now that most rational participants will have migrated (except where, such as in the case of SPV’s and much smaller nodes, they do not need a full copy of the blockchain database and still verify by querying proxy nodes).

There was some controversy over whether this reduced security as the nodes that did not update could not validate who could subsequently spend UTXO’s since the modification to the old syntax meant that there was a change in the vocabulary of how the signature script was expressed (as to the recipient). However, since sufficient nodes would be using the update, the impact on security was minimal in terms of the network as a whole.

[Mike_C]

1. Increasing the block size.

2. Transaction Malleability - The ability to change the signature and produce a completely new hash

3. The lightning network was enabled by Segwit adoption. After Transaction Malleability was solved, developers could focus on an application layer.

4. No.

[LuMpY7]

@Mauro

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.

So adding the lightning cured the transaction malleability, ability to use unconfirmed transactions, and the Segwit soft fork was what they called the institution of Lightning, and it also made the unconfirmed transactions more secure, or they were more secure because of the lightning protocol, or both?

[JamieGoh]

Answers:

1. A proposed alternative to Segwit is to increase the block size limit.

2. Aside from solving scaling issue, it also solves malleability issue by separating out the signature from a block.

3. Segwit support Lightning network as its second layer protocol. It boost bitcoin’s transaction capacity by taking frequent, small transactions off-chain, only settling on the bitcoin blockchain when the users are ready.

4. No. However by embracing Segwit, services can enhance bitcoin’s scope and potential. And for users, they can enjoy a lower fee which in return increase the adoption of cryptocurrency from the public.

[Technophile]

1. What was a proposed alternative to Segwit?
   In the article, the only proposed alternative I could find was the Bitcoin Cash hard fork which argued to increase the block size as opposed to changing the transaction structure and relying on 2nd layer solutions for transaction scalability. In my understanding though, even the 8mB blocks that BCH has would eventually be full if complete worldwide adoption were to be reached, so that too is “kicking the scalability can” down the road.

2. What did Segwit solve more than just the scaling issue?
   It solved the transaction malleability problem which previously made it possible for anyone to make some minor change in the transaction ID which in turn would also change the hash for the transaction (and they could do this either accidentally, or deceitfully on purpose). Afterwards if someone were using the old hash to find the transaction in the blockchain, they wouldn’t be able to find it and the recipient could claim that they didn’t receive the BTC, sometimes getting the sender to send a second transaction.

3. How is Segwit and the Lightning network connected?
   The Lightning network is a second layer protocol built on top of SegWit which was made possible due to the fact that features relying on transactions with zero confirmations were “less risky and easier to design” as the article puts it.

4. Are people, wallets and other services forced to use Segwit?
   No, but many big name wallets and companies like Coinbase have already added SegWit support.

[WesselVosloo]

1. What was a proposed alternative to Segwit?
   increase the the blocksize.

2. What did Segwit solve more than just the scaling issue?
   It solved the malleability issue

3. How is Segwit and the Lightning network connected?
   It supports second layer layer development that will unable lightning network in the future

4. Are people, wallets and other services forced to use Segwit?
   Yes, They all needed to upgrade their wallets

[alexcapri]

1. An alternative to Segwit was the increasing of the block size from 1 to 2 mB.
2. Segwit update did not only solve the scaling issue regarding the block size but it was initially proposed to solve the transaction malleability which is the the fact that someone could change the signature of a transaction without touching the transaction data itself but this would change the transaction ID.
3. Segwit solved the transaction malleability issue that was blocking future implementation on top of the Bitcoin blockchain. Segwit made possible the creation of a top layer called lighting network as the tx malleability was solved.
4. Segwit is used from updated nodes, wallet and other services. But the update is not mandatory as it’s a soft fork.

[ArielVB]

1. The alternative to Segwit was to increase the block size.

2. Segwit avoided a hardfork in the bitcoin blockchain, also it increased the possibility to integrate more transactions in the block without modifying its size.

3. They are connected by the possibility to build a second layer protocol.

4. They are not forced but since Bitcoin core and most respected companies by the community have already implemented is a question network effect.

[Alko89]

@WesselVosloo

Yes, They all needed to upgrade their wallets

No, Segwit was a soft fork and is backwards compatible, so people are not forced to use it. Although it is highly recommended

[Mauro]

@LuMpY7

So adding the lightning cured the transaction malleability

No. Segwit is what solved the transaction malleability. Because of that, lightning network was possible. This is because lightning network relies on unconfirmed transactions.

[RCV]

1. Increased Block Size
2. Transaction Malleability
3. Segwit supports the implementation of second layer protocols
4. No it was a softfork

[StintheKid]

1. What was a proposed alternative to Segwit?
   Some wanted to just simply increase the block size past 1mB. This group ended up forking into BCH

2. What did Segwit solve more than just the scaling issue?
   Outside of the scaling issue, SegWit’s removal of signatures made TXIDs no longer malleable and increased security.

3. How is Segwit and the Lightning network connected?
   With increased security and more TXs per block, Segwit enabled second layer protocols including lightning network

4. Are people, wallets and other services forced to use Segwit?
   No indiviuals and companies etc, can opt in to it.

[WesselVosloo]

Thanks for the feedback, It was explained later in the lecture