What Is SegWit?
SegWit (Segregated Witness) is a Bitcoin upgrade, activated in 2017, that moves signature data into a separate part of each transaction. It fixed transaction malleability, expanded block capacity and lowered fees.
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SegWit (Segregated Witness) is a Bitcoin protocol upgrade that separates a transaction’s signature data, known as the witness, from the rest of the transaction. It was activated as a soft fork on August 24, 2017. SegWit fixed two long-standing problems: third parties being able to alter transaction IDs, and Bitcoin’s tight block capacity. Today the large majority of Bitcoin transactions use SegWit addresses.
What problems did SegWit solve?
Transaction malleability: before SegWit, signature data was part of the data used to calculate a transaction’s ID (TXID). Third parties could make small cosmetic changes to a signature, without invalidating it, and change the TXID of an unconfirmed transaction. No funds were stolen this way, but systems that tracked payments by TXID could be thrown off. SegWit moved signatures out of the TXID calculation and removed the problem.
Block capacity: Bitcoin blocks were capped at 1 MB, and fees spiked whenever demand rose. SegWit replaced the byte limit with a limit of 4 million weight units. Each byte of witness data counts as 1 unit and every other byte counts as 4, which effectively enlarged blocks without breaking compatibility with older nodes.
How does SegWit lower fees?
A Bitcoin fee is the transaction’s size in virtual bytes (vB) multiplied by the fee rate you choose, and one vbyte equals four weight units. Because witness data is discounted, a SegWit transaction has a smaller virtual size than a legacy transaction with the same inputs and outputs, so it pays less. How much you save depends on the transaction’s structure.
SegWit isn’t a guarantee of cheap transfers, though. When the network is congested, fee rates climb for everyone, and spending lots of small UTXOs in one transaction still makes it larger.
How can you tell a SegWit address?
The first characters of a Bitcoin address reveal its type:
- Starting with “1”: legacy addresses, which pay the highest fees.
- Starting with “3”: P2SH addresses, also used for multisig; during the transition they let SegWit work with older systems (“nested SegWit”).
- Starting with “bc1q”: native SegWit addresses, often labeled “Native SegWit” in wallets.
- Starting with “bc1p”: Taproot addresses, introduced with the Taproot upgrade activated in November 2021.
All of these work on the same Bitcoin network and can send to one another, as long as the sending platform supports the recipient’s address format. Don’t try to convert an address by hand; use the one your wallet generates on its “Receive” screen.
The easiest way to benefit from SegWit is to use a wallet that offers Native SegWit or Taproot addresses. If you still hold coins on an old address starting with “1,” moving them to a newer address type while fees are low can save you money on future transactions.
Why was SegWit controversial?
SegWit arrived in the middle of Bitcoin’s years-long block size debate. One camp wanted to raise the block size limit directly instead. That camp split off just before SegWit activated, launching Bitcoin Cash on August 1, 2017.
By fixing malleability, SegWit also cleared the way for the Lightning Network, which enables fast, low-cost payments off the main chain.
Frequently asked questions
Can I withdraw bitcoin from an exchange to a bc1q address?
Most major exchanges support bc1q addresses today. If you’re unsure, check the address validation on the withdrawal screen and the exchange’s help pages.
Did SegWit remove signatures?
No. Signatures are still part of the transaction and are fully verified by nodes; they are simply stored in a separate section and weighted differently.