Segwit Reading Assignment

1: The alternative to Segwit was an increase in the block size.

2: Segwit helps to solve the issue of transaction malleability

3: Segwit supports a second layer solution, allows for Lightning Network

4: No. None of the network is forced to use Segwit as it is a ‘soft fork’ update, and still compatable with the old protocol.

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  1. Increase blocksize
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  1. Fixes Transaction malleability
  2. By taking signing info off the main block chain, this has enabled separate off-chain payment channels to be possible where payment channels basically use an escrow type of entry on the main blockchain but take multiple follow-on transactions off -chain in the lightning payment channel. When the payment channel is closed, the net balance of all lightning transactions is recorded on the blockchain.
  3. No, Segwit and Lightning are consensus based ie: soft forks.
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Hi @Guccigzz :slight_smile:
Segwit was a bit of a special soft fork in this regard. Since both old and new nodes would basically still be able to accept both blocks (not like if for example blocks would become smaller). Old nodes simply see this tx as being spendable by all and only the new nodes are aware that this is not the case and act accordingly when they handle segwit type txs. Therefore to both nodes these transactions and blocks seem valid and they accept it.
Segwit is more an issue on the level of a wallets since they must be capable of creating these types of transactions and allow to receive funds from the old wallets that don’t support it thus the backwards compatibility is also important :slight_smile:

The Lightning network and Swgwit are two different projects. But Segwit did made these kind of solutions easier and safer to implement :slight_smile:

Thanks for you for the correction, so is the lightning network a second layer solution to make faster transactions between nodes? @Alko89
I’m clear that Segwit is a different project.

The nodes on the Lightning network are not the same nodes as the nodes on the Bitcoin network. It is a separate network (second layer of nodes) that communicates with the main Bitcoin network :slight_smile:

Thanks again Alko you have it made easy for me to understand in your explanation .
Cheers @Alko89

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Homework on Segregated Witness - Questions, July 21th 2020

  1. What was a proposed alternative to Segwit?

The proposed alternative was to increase date structure size.

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

Segwit solved the issue by preventing Bitcoin users from modifying transaction signatures.

  1. How is Segwit and the lightning network connected?

Segwit and lightning network are connected at the second layer of the protocol.

  1. Are people, wallets and other service forced to use Segwit?

The Bitcoin user is not forced to use Segwit. The new transaction style is
optional.

-Hector A. Martinez

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1- An increase to the block size from 1 meg to 2 meg was proposed as alternative but did not solve the problem.
2- More than the scaling issue Segwit solves the problem of malleability where the hash of a tx. (tx. ID) can be changed resulting in different ID for the same transaction.
3- Segwit makes another layer possible like the lightning network
enhancing performance.
4- Wallets are not forced to use segwit and not all hardware wallets went for the upgrade.

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1.- the segwit proposal was to increase the block size, but this was going to produce a hard fork
2.- segwit solved the transaction malleability, also provides support for a second layer solution
3.- segwit and lightning networks are connected by the second layer solution
4.- no because it is a soft fork, at the same time wallets are adding segwit support.

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What was a proposed alternative to Segwit?

Double the size the block from 1mb -> 2mb.

What did Segwit solve more than just the scaling issue?

The malleability problem with alter the design of the signature to defraud people. The signature is not a part of the transaction data structure which is the txid. The txid get hashed and dont including the signature to get hashed anymore.

How is Segwit and the Lightning network connected?

Lightning network is a second layer protocol which are predicated on segwit code change.

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

Segwits force people, wallets or other services to use it, if your wallet don’t support segwit, you won’t be able to send bitcoin to a native segwit adress, you also pay higher fees than someone using a segwit bitcoin wallet.

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  1. What was a proposed alternative to Segwit?
    An alternative proposal to Segwit, that was named in the article, was an increase of the block size. Bitchion cash was born out of that alternative solution.

  2. What did Segwit solve more than just the scaling issue?
    It solved the malleability problem. The old protocol was susceptible to changes in the transaction ID:s retroactively. Such a retroactive change would then change the whole hash to the block and could be used to mislead uninformed users. By “lifting out” the signatures from the actual blocks (segregating the witness), Segwit solved this vulnerability.

  3. How is Segwit and the Lightning network connected?
    The malleability fix in Segwit made it less risky and easier to design features that relies on unconfirmed transactions. Lightning network is such a second layer protocol.

  4. Are people, wallets and other services forced to use Segwit?
    No Segwit is a soft fork.

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  1. The alternative was to increase the block size from 1mb to 2mb. Some thought this was a good idea, others thought this would be a temporary fix that would lead to the same problem later on, i.e. 2mb blocks being full followed by a debate about 3mb blocks and so on.

  2. In addition to bitcoin’s scaling issues, SegWit also solved its malleability issues. Before SegWit, bitcoin users could tamper with the signatures on a transaction, thereby changing the unique ID of the transaction itself, and making it look as if the transaction was never sent. With SegWit, all the signature data would be stored outside the base transaction block, so tampering with the signatures was no longer possible. This helped to make bitcoin more secure as well as more efficient.

  3. SegWit allows the development of second layer protocols such as the lightning network, which boosted bitcoin’s transaction capacity by taking frequent, small transactions off-chain, and only settling on the bitcoin blockchain when the users are ready.

  4. No, it was a soft fork, so no one is forced to use SegWit. As of February 2018, Trezor, Ledger, Electrum and Kraken had already added SegWit, but Coinbase had not.

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  1. To increase block size
  2. Made it more secure by removing malleability risk
  3. Segwit enables second layer protocols to be built.
  4. No they are not forced.
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  1. A proposed alternative to Segwit was an increase in the block size from 1MB to 2MB. This would have been an expansion of the ruleset/protocol, and would have resulted in a hard fork of the blockchain. In fact there was enough support for this alternative that the hard fork did take place, and is currently known as Bitcoin Cash.

  2. Segwit solved the scaling issue by separating the signature (witness data) from the transaction data of each block, decreasing the byte size of each transaction. But it also solved the problem of transaction malleability.

Remember that the slightest alteration in a block changes its hash dramatically. An exploitation of this feature would be to alter something in the block that does not alter the transaction itself e.g. adding a random extra letter to the signature. Then the hash of the block would change. So suppose Alice sent a transaction X to Bob. Bob then makes a small alteration to X, before confirmation, that results in a hash Y != X. Then the recipient Bob asks the sender Alice where the transaction X is. Alice will then look for X and not be able to find it… because it was changed to Y by Bob. So Bob asks Alice if she could send the transaction again; Alice has been swindled. This is what is known as transaction malleability.

Segwit solved this problem by separating the transaction data from the signature. The alteration of the signature would then be independent of the transaction, and not change the hash. Now transactions are no longer malleable in the same way, and the exploit explained above is fixed.

  1. The introduction of Segwit “supported the development of second layer protocols, such as the lightning network. The malleability fix made any feature that relied on unconfirmed transactions less risky and easier to design.”

The lightning network further boosted the bitcoin blockchain’s transaction capabilities “by taking frequent, small transactions off-chain, only settling on the bitcoin blockchain when the users are ready.”

(Source: https://www.coindesk.com/information/what-is-segwit )

  1. Segwit is not required to be a part of the blockchain; people, wallers and other services do not need to adopt this protocol. At the time of the article above’s publishing, only “14% of transactions were using the new format”. However, as the adoption of Segwit grows across the network, the whole network will benefit from the reduced fees (as the number of transactions per block will increase) and the future adoption of other second layer protocols that will expand the capabilities and potential of the bitcoin blockchain.
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  1. To increase the block size, which caused a hard fork= BitcoinCash

  2. Segwit reduced the tx size and solve the signatura malleability.

  3. Segwit allows the use of second layer solution over Bitcoin, like Lightning network.

  4. Segwit is not forced, but when more people/nodes use it more difficult will be to not implement this tecnology, because the ones using the all version keep paying higher fees for their transactions. Also, they don’t get to verify the signatures, so it is in the everyone best interest to use it.

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  1. The proposed alternative was to increase the block size.
  2. That signatures and scripts can be changed with out effecting the transaction id.
  3. Segwit supports the lightning network , lightening network boosts Bitcoins transaction capacity by taking frequent small transaction off chain only settling on Bitcoin blockchain when the users are ready.
    4 No adoption of segwit is voluntary
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  1. The proposed alternative was to increase block size to 2 mB which led to a hard fork and created Bitcoin cash

  2. Other than scaling, Segwit solved the tx malleability by removing the signature form the transaction data structure

  3. Lightning network, is a second layer protocol, increasing speed, tx/sec

  4. I dont think so, people and wallets can still use same tx data structure, but it is slower and costs more, so it was a soft fork

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  1. What was a proposed alternative to Segwit?
    The proposed alternative to Segwit, was to increase the block size to 2 mb.

  2. What did Segwit solve more than just the scaling issue?
    The Segwit solution solved the scaling issue and it also made the network more secure when the signature of the transaction was removed, thus eliminating TX malleability.

  3. How is Segwit and the Lightning network connected?
    The Lighting network and Segwit are connected via payment channels for micro transactions. The Lightning network runs “off chain”, opening and closing channels.

  4. Are people, wallets and other services forced to use Segwit?
    Miners are forced to upgrade to the Segwit software if they want to continue mining Litecoin and Bitcoin. Also, people who have wallets holding Litecoin and Bitcoin.

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