What is a SegWit address? Segregated Witness, or SegWit, is a proposed solution to the Bitcoin network’s scalability problem. In August 2017, it was implemented as a soft fork, which meant that nodes running older versions of the Bitcoin software could still participate in the network, albeit with limited functionality.
But what does it actually do? The main idea behind SegWit address is to separate transaction signature data (witness data) from transaction data, allowing more transactions to be included in each block and thus increasing network capacity. It also addresses a bug in the Bitcoin protocol that allowed certain types of transaction malleability, or the ability to change a transaction without changing its underlying economic meaning.
SegWit address example: A SegWit address format starts with a “3”: 3JvL6Ymt8MVWiCNHC7oWU6nLeHNJKLZGLN.
Benefits of SegWit Address
SegWit offers several benefits for the Bitcoin network and its users. Here are some of the main benefits of SegWit:
Increased transaction capacity. SegWit separates the transaction signature data (witness data) from the transaction data, which reduces the size of each transaction. This allows more transactions to fit in each block, increasing the network’s capacity and reducing the fees for each transaction.
Transaction malleability fix. SegWit addresses a long-standing issue in the Bitcoin protocol known as transaction malleability, which allowed attackers to modify the transaction ID without changing the transaction’s underlying economic meaning. This was a problem for some Bitcoin applications, such as smart contracts, which rely on predictable transaction IDs.
Security improvements. SegWit introduces several security improvements, such as preventing certain types of denial-of-service attacks and improving the privacy of multi-signature transactions.
Soft fork. SegWit was implemented as a soft fork, which means that nodes running the older version of the Bitcoin software could still participate in the network, but with reduced functionality. This allowed for a smoother upgrade process and reduced the risk of a network split.
Enabling new features. SegWit enables the implementation of new features on the Bitcoin network, such as the Lightning Network, which is a layer-two payment protocol that allows for near-instant, low-cost bitcoin transactions.
Read more: What is the Lightning Network?
Apps/Platforms Supporting SegWit Transactions
Many bitcoin wallets, exchanges, and other applications have added support for SegWit addresses, allowing their users to take advantage of the benefits of SegWit. Here are some examples of apps and platforms that support SegWit.
- BlueWallet is a mobile bitcoin wallet that added support for SegWit in 2018. BlueWallet users can generate SegWit addresses and take advantage of the benefits of SegWit, such as lower fees and faster transaction times.
- Muun is a non-custodial bitcoin wallet that supports SegWit for bitcoin transactions. This means that users can send and receive bitcoin using SegWit addresses, which can result in lower transaction fees and faster confirmation times compared to non-SegWit transactions.
- Samourai Wallet is a privacy-focused bitcoin wallet that has supported SegWit since 2017. Samourai Wallet users can generate SegWit addresses and take advantage of the reduced fees and faster transaction times.
- Wasabi Wallet is a privacy-focused bitcoin wallet that has supported SegWit since 2018.
- Blockstream Green is a bitcoin wallet that has supported SegWit since 2017.
- Mycelium is a Bitcoin wallet that added support for SegWit in 2018.
- Electrum is a popular bitcoin wallet that has supported SegWit since version 3.0, released in 2017.
- Exodus is a popular multi-currency wallet that added support for SegWit in 2018.
- Ledger Live is the official wallet app for Ledger hardware wallet, and it supports SegWit addresses for bitcoin transactions. Users can choose between SegWit and legacy addresses when sending and receiving bitcoin.
- Trezor is a popular hardware wallet, supports SegWit addresses.
SegWit Exchanges and Services
- Bisq is a decentralized Bitcoin exchange that added support for SegWit in 2018. Bisq users can generate SegWit addresses for bitcoin transactions and take advantage of the benefits of SegWit.
- Hodl Hodl is a peer-to-peer cryptocurrency exchange that allows users to trade bitcoin without the need for a middleman or a centralized platform. Hodl Hodl has implemented SegWit on its platform.
- River Financial is a bitcoin-only financial institution that provides its services in the USA. It supports SegWit, which allows users to deposit and withdraw bitcoin using SegWit addresses.
- Bitrefill is a service that allows users to purchase gift cards and top-ups with bitcoin. Bitrefill added support for SegWit in 2018, which allows users to pay lower fees when purchasing with bitcoin.
- BTCPay Server is a self-hosted, open-source payment processor that allows merchants to accept bitcoin payments. BTCPay Server added support for SegWit in 2017, which allows merchants to receive bitcoin payments to SegWit addresses.
- BitPay is a payment processor that added support for SegWit in 2018. BitPay users can use SegWit addresses to send and receive bitcoin.
These are just some of the apps and platforms that support SegWit. As SegWit adoption grows, we can expect more platforms to support it in the future.