It is going to be a wild summer for the price of Bitcoin. The only certainty in the space will be change.
Watching the roller coaster is fine for the speculators out there, but maybe new protocol reinforcements will help spur prices higher, and stabilize the environment. The much-hyped Segregated Witness application is about to be brought into play, if it hasn’t already, by the Bitcoin Core developers.
Confirming the unconfirmed
News of the advancement forward of Segregated Witness, or SegWit, made waves on Reddit’s r/Bitcoin Thursday afternoon in the form of a single forum discussion screen capture posted on Imgur. This pic seems to indicate a discussion by the Core developers about now being the time to put SegWit into action, after spending an appropriate amount of time within the testnet.
It would be far too easy to just take this at face value and say SegWit is now operational on Bitcoin’s blockchain, but another forum source on botbot.me has another conversation that says the opposite.
Note the times above in the screen capture. In the botbot.me forum, just a few minutes later, it seems a similar conversation is going on, dated yesterday, with the same usernames.
Under the heading “#bitcoin-core-dev,” CodeShark says “just to be 100% clear, the plan is no more minor releases on 0.12, merge segwit into master now but without activation parameters. Correct?” gmaxwell simply responds “CodeShark: No.”
So we can gather that SegWit may or may not be actively used beyond the testnet at this time, but until a formal announcement by Bitcoin Core can be reviewed, it is safer to assume that it is very, very close to deployment, if not currently active.
This seems to answer the speculation of if SegWit will beat the Bitcoin halving event to market as the discussion is more in line with a proper release within a day or two. The actual announcement may come from a large mining pool, or other informed third’ party rather than from the Core developers.
Benefits of SegWit
Now would be a good time to review the benefits of adding SegWit to the protocol. Primary among them is the ability to make the current blockchain block size much more efficient, in real-world practical applications.
Since old nodes will only download the witness-stripped block, they only enforce the 1 MB block size limit rule on that data.
New nodes, which understand the full block with witness data, are therefore free to replace this limit with a new one, allowing for larger block sizes.
Segregated Witness, therefore, takes advantage of this opportunity to raise the block size limit to nearly 4 MB, and adds a new cost limit to ensure blocks remain balanced in their resource use (this effectively results in an effective limit closer to 2 MB).
Transaction times will shorten
Hopefully, this will help get transaction times closer to the optimal ten minutes than the current times of 30-60 minutes, at least in my personal experience.
Other benefits include , but may not be limited to malleability fixes, an easier implementation of the upcoming Lightning Network, simplification of the addition of “smart contracts” to Bitcoin’s protocol, more linear scaling of sighash operations, the ability to start signing input values, increased security for multi-sig via pay-to-script-hash (P2SH), can add script versioning functionality, reduction of UTXO growth and Compact fraud proofs.