How does the Segregated Witness (SegWit) upgrade technically solve the transaction malleability issue, and what profound impacts has it had on Bitcoin's block size and transaction fees?

SegWitTransaction MalleabilityBlock SizeTransaction FeeBitcoin
Created At: 7/29/2025Updated At: 8/17/2025
Answer (1)

How Does the SegWit Upgrade Technically Solve Transaction Malleability?

Transaction Malleability refers to an attacker’s ability to alter the signature portion of a transaction (e.g., by adjusting signature formats) without changing its core content (such as inputs and outputs), causing the transaction ID (TXID) to change. This can lead to double-spending attacks or failed transaction confirmations, as the network may fail to track the original transaction correctly.

SegWit addresses this issue through the following technical mechanisms:

  • Separating Witness Data: SegWit splits a transaction into two parts:
    • Transaction Core Data: Includes critical information like inputs and outputs, used to calculate a new transaction ID (called wtxid).
    • Witness Data: Contains signatures and scripts, moved to a separate "witness" field.
  • Immutable Transaction ID: The TXID is now calculated solely from the transaction core data, excluding witness data. Thus, even if signatures are modified, the TXID remains unchanged, eliminating the malleability vulnerability.
  • Introducing New Identifiers: SegWit uses wtxid (based on full transaction data) for internal processing, while the externally exposed TXID remains stable, ensuring reliable transaction tracking.

SegWit’s Broader Impact on Bitcoin Block Size and Transaction Fees

Impact on Block Size

  • Increased Effective Block Capacity: SegWit replaces the original 1MB block size limit with a "block weight" concept. Witness data carries a lower weight (1 unit/byte), while core data has a higher weight (4 units/byte). The block weight cap is 4,000,000 units, allowing actual block sizes to reach ~2–4MB (depending on witness data ratio) while nominally adhering to the 1MB limit.
  • Broader Implications:
    • Alleviates block congestion, enabling more transactions per block (average capacity increase of 1.7–2 times).
    • Provides a soft-fork scaling solution for Bitcoin, avoiding hard-fork risks and laying groundwork for future upgrades (e.g., Taproot).
    • Long-term, it delayed but did not fully resolve scaling debates, prompting continued exploration of Layer 2 solutions (e.g., Lightning Network).

Impact on Transaction Fees

  • Reduced Average Fees: Increased block capacity allows miners to include more transactions per block, boosting transaction supply. With stable demand, fee competition weakens, lowering average fees (e.g., post-SegWit activation, Bitcoin’s average fee dropped from tens of dollars at peaks to a few dollars).
  • Broader Implications:
    • Enhanced network efficiency and accessibility, making small-value transactions economically viable.
    • Fees may still surge during peak demand (e.g., bull markets), but SegWit’s capacity buffer mitigates extreme congestion.
    • Long-term, it promoted Bitcoin’s everyday use and adoption while incentivizing fee-optimization techniques (e.g., transaction batching), though the core fee model (supply-demand-based) remains unchanged, leaving fees volatile per market dynamics.

Overall, SegWit resolved malleability through technical innovation and significantly improved Bitcoin’s scalability and cost efficiency. However, its impact is gradual and depends on network adoption (as of 2023, over 80% of transactions use SegWit).

Created At: 08-04 14:36:51Updated At: 08-09 01:49:28