Segregated witness (or SegWit) was introduced as an update for the Bitcoin protocol in 2015 to optimize transactions using the segregated witness consensus layer.
Understanding the term
SegWit is defined as a much-needed change in the protocol of Bitcoin, which was added through a soft fork in the original network in 2017. This coincided with the beginning of the scalability debate in the Bitcoin community.
SegWit is now not only optimizing Bitcoin transactions but also being used in many other cryptocurrency networks, such as Litecoin (LTC). Through SegWit, the load of block transactions is separated into two parts so that it becomes easier to increase the number of transactions included in same-sized blocks.
One of the two parts of a transaction has the wallet addresses of the sender as well as the receiver, while the second part is “witness data” that comprises transaction signatures. Additionally, SegWit also allows users to change the transaction hashes by removing a flaw in the Bitcoin protocol.
In 2017, the Bitcoin community demanded a solution to increase scalability in the Bitcoin protocol. Ultimately, it was decided to implement a segregated witness consensus layer (now SegWit) using a soft fork to improve the throughput on any blockchain network.