In 2015, a concept to solve Bitcoin’s scalability issue was first proposed. Today, a year and a half later, the widely accepted solution to Bitcoin’s scalability problem has been locked in earlier this afternoon, namely SegWit, or Segregated Witness.
SegWit solves part of Bitcoin’s scalability problems by removing signature data from transactions, or ‘segregating’ it, allowing for more transactions to be fit within a block by freeing up space that was previously occupied by these signatures. The transaction data will then be shared across multiple nodes who will be ‘witnessing’ the transactions. These two processes together make up SegWit, and will make transactions much quicker by allowing more transactions to fit within a single block.
Although this change has been adopted today, it is not be a change that is instituted over night. Because the change to SegWit requires miners to update their software, and users to update their Bitcoin wallets. There is a two week grace period, as the expected time for SegWit to go live is on August 21st, although there may be some variation due to block times.
This change is the most effective way to solve Bitcoin’s scalability, especially without requiring a fork, much like what Bitcoin Cash did. Their solution to scalability was to increase blocksize by 8x, while abandoning SegWit, however they had to fork off of the Bitcoin blockchain in order to do so, and the Bitcoin community did not follow. With SegWit, there had to be a consensus of >95% of the network signalling support.
In short, SegWit is a highly supported solution to some scalability issues that Bitcoin has been experiencing. It allows for the number of transactions per block to be doubled by removing the signatures from transactions, and instead has nodes witness the transaction. Moreover, the price of Bitcoin has been reflecting the community’s sentiment towards SegWit, and has reached yet another all-time high, this time above $3,500 ($3456 at the time of writing). Overall, the future looks bright for Bitcoin despite a recent fork, and a new protocol being locked in and waiting to be activated.