Segregated Witness: Protocol change is to make Bitcoin more powerful

The Bitcoin community is currently required to vote on a change to the protocol of crypto-nutrition. The amendment called “Segregated Witness” is intended to help resolve the highly controversial issues of how more blocks of data can be processed in the data blocks of the distributed accounting file Blockchain to make the system more efficient.

If 95 percent of the bitcoin miners signal approval over a period of about two weeks (2016 blocks in the blockchain), the change should come into force and be armed within another two weeks. The activation parameters required for approval are implemented in version 0.13.1 of the reference client Core. Approval is indicated by a modified header in the block that the miner has generated. This reconciliation procedure may seem cumbersome, but a fundamental change in the protocol can not be dictated “from above down” in a decentralized system such as Bitcoin. A majority vote is required.

The size of the data blocks in the blockchain is set to 1 megabyte in Bitcoin – and the change is not to be shaken at this limit either. Rather, the transaction data under the limit should be segregated with Segregated Witness. The cryptographic signatures that prove that a transaction has been correctly signed with a private key are separated. Instead of storing them as in the block in the data fields of the respective transaction, they are recorded in a tree structure from hash values (Merkle Tree) and entered in this form in a range that is not used to determine the size of the data block. According to estimates by the core developer team, up to 70 percent more transactions could be accommodated in one block. Apart from this, this new method of separate signature storage is also intended to bring about various security advantages.

The change is supposed to take place as a so-called soft fork, thus also compatible with older clients. A hard fork would rule out this downside compatibility, so that noncompromising users would be blocked. A direct increase in the block size would probably have required this hard action – but the team of core developers wanted to avoid this. Therefore, the decision for indirect capacity expansion.

The proposal was criticized as being unsustainable and much too conservative by many stakeholders. In particular, some of the bitcoin miners, which are increasingly concentrated in China and act on data center resources, initially opposed it. The developer Mike Hearn explained because of the dispute even its exit from the bitcoin. Hearn’s alternative suggestion Bitcoin XL as well as the Bitcoin Classic presented afterwards, both of which provided for increased block sizes, were not widely accepted.

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