Bitcoin Segwit2X: All What you need to know
Bitcoin Segwit2X: All What you need to know. For all the security, anonymity and freedom from central control that bitcoin offers, transaction speed has always been its Achilles heel. To put things in perspective, while a payment gateway like Visa can process thousands of transactions every second, the bitcoin network can process only seven transactions per second. If you wonder why transactions are slow and how Segwit2X could bring about a change. kamerpower.com
Blockchain and Block size
Bitcoin transactions are recorded in a ledger of transactions that is called the blockchain. It is made up of blocks which are linked serially to form the whole chain. Each block, in turn, holds transactions that have been validated over a period of about ten minutes. Bitcoin rules restrict the maximum size of a block to 1MB. Thus, only a limited number of transactions can be validated in a given amount of time (Up to a maximum of seven transactions per second).
The transaction limit wouldn’t be much of a problem if the number of transactions is low. But now that bitcoin is becoming mainstream and the volume of transactions is expected to rise exponentially, it could mean long delays before transactions could be validated. Also, people who validate transactions called miners could charge more for priority validation.
SegWit — a novel proposal
Segregated Witness, SegWit in short, is a novel proposal we’ve covered previously as well. SegWit increases the limit on the number of transactions that could be made in a period of time. It is novel in that it does this without increasing the block size of 1MB. Thus, no existing blockchain rules would have to be changed.
Also Read: SegWit Explained – Segregated Witness SegWit2X
To understand how SegWit works, you need to know how bitcoin transactions work. Each bitcoin user has a bitcoin wallet identified by its unique address. And each wallet has a public key and a private key. When you send bitcoins to someone, what the software does is take bitcoin from your account and lock it with the recipient’s public key. This information is added to the blockchain. Afterwards, only the recipient can use their private key to unlock the bitcoins and use it in some other transaction.
To allow everyone to verify that the transaction has been authorised by you and has not been made fraudulently, your signature is needed. The signature is a piece of code on which your public key can be used to verify that the transaction was authorised by you. Thus, your signature along with your public key is also added to the transaction information stored in the blockchain.
