The Bitcoin scaling debate generated a lot of dispute in the community, but amid all this chaos emerged a temporary solution that would alleviate the block size issue. This was the SegWit update.
On August 23rd, 2017, Bitcoin was soft forked or upgraded to incorporate SegWit to fix the coin’s scaling problem.
What is SegWit?
SegWit, which is the abbreviation for Segregated Witness, is an upgrade to a blockchain protocol which modifies the storage of data. It removes signature data from transactions, and as a result, it increases the block size limit of a blockchain.
The initial purpose of the update was to fix a bug in the code that was about transaction malleability, which gave access to anyone to modify details in the transaction and the following hash, without affecting the content. While this was not a huge issue, it hindered the development of other features such as smart contracts and second-layer protocols.
The protocol improved transaction flexibility by removing the signature information (or “witness” information) and stores it outside of the base transaction block. Because of this, signatures and scripts can be modified externally without changing the transaction id.
Bitcoin developer Pieter Wuille is responsible for creating the concept of SegWit.
Bitcoin is not the only coin to have implemented this update. There are many altcoins that have also activated SegWit on their blockchain.
Even though Litecoin was created from a fork from Bitcoin, it was actually Litecoin that has SegWit implemented first- on May 10th, 2017.
Litecoin was created to serve as the silver to Bitcoin’s gold as well as the purpose of acting as a testing ground for the latter crypto. Both Bitcoin and Litecoin are performing rather well and remarkably LTC is serving as a testbed for Bitcoin.
Atomic swaps between BTC and LTC were conducted to further solidify the path for scaling.
Vertcoin was created in 2014 to be a peer-to-peer cryptocurrency. Because of this, they implemented mining algorithms that made the use of ASICs impossible, which allowed the mass mining of Vertcoin in a decentralized fashion.
Vertcoin was the next after Litecoin to activate SegWit and start testing for it. The first attempt to implement the upgrade in February was not met with much success, halving the blockchain due to a bug. Vertcoin developer that goes under the pseudonym etang600, however, pointed out that the issue was due to poor implementation, and was unrelated to the SegWit upgrade itself.
In the end, Vertcoin implemented SegWit on May 7, 2017, to benefit from faster transactions and lowered network fees. Afterward, the Vertcoin software was updated for new SegWit address formats.
The Digibyte project established in 2014 is another proof of work coin which aims to be a decentralized digital asset that solves some drawbacks that Bitcoin and Litecoin presented.
Digitbyte incorporated 5 mining algorithms in its code to achieve proof of work, making it completely decentralized.
The coin also activated SegWit in 2017 and it managed to do so before Vertcoin’s activation, after much deliberation and consensus from its community in April of that year.
4. Nav Coin
Nav Coin is an altcoin focused on privacy which has implemented a proof of stake protocol with dual blockchain. The project has been created in 2014 based on Bitcoin’s core code.
Seeing as Nav Coin also uses the UTXO model like Bitcoin, it also had its transaction malleability issue.
To solve this issue, Nav Coin also activated SegWit on its blockchain, making it the first PoS coin to have a SegWit implementation on its blockchain.
Syscoin released on March 31st Syscoin Core 2.1.3 with SegWit fully activated, having the objective of becoming a decentralized marketplace.
It integrated SegWit to solve the transaction malleability seeing as it was also a fork of Bitcoin.
SegWit activation led to a positive growth in the coin’s price. It succeeded in activated SegWit in the first quarter of 2017 around the same time Litecoin had its own SegWit implementation.
Developed in 2014, Groestlcoin is one of the least known coins in our list (being ranked 146th in the overall Coinmarketcap according to market cap), however, it is one of the first coins to have a successful activation of the SegWit protocol.
The required consensus level reached 95% this January, after which the activation was commenced. However, due to the project’s less significant size, scalability was never an issue compared to that of Bitcoin.
As many of these altcoins were forked from Bitcoin, it made sense that they would also implement SegWit following the example of Bitcoin and Litecoin because they inherited the flaws that were inherent to Bitcoin’s blockchain.