Srp 25

Segwit Activated: How it Works & What’s Next for Bitcoin

· August 25, 2017 · 4:00 am

Segregated Witness, or Segwit, has finally been activated by a super majority of the current hashpower on the Bitcoin network. Segwit fixes many bugs currently in the protocol, and allows for some scaling using an effective blocksize increase.


Almost two years of debate

In December of 2015, the source code for Segregated Witness (Segwit) was released. It was meant as a fix for the ever-problematic transaction malleability bug, which allowed for someone to change one or two characters of a transaction’s ID before it was cemented into the blockchain. Along with that, it provided a method of scaling Bitcoin. Doing away with the concept of a blocksize, a new metric was made called blockweight.

For years the software was not added to the Bitcoin protocol as it never garnered the necessary 95% of the hashpower needed to activate. It was to be implemented though means of a softfork, which meant it would comply with all currently consensus rules and be backwards compatible with those running old software and did not wish to upgrade.

Whether you believe that Segwit was a direct result of the grassroot approach of BIP148 forced miners to finally activate it after all this time, or the New York Agreement was the reason everyone came together to signal for Segwit, it is finally here.

A second BIP was released weeks ago to lower the activation threshold to 80% of the hashpower, but even with the lowered bar Segwit still achieved around 97% signaling and locked in during the beginning of August.

After the official lock-in period, the network allowed for two weeks to provide grade period of sorts for people to upgrade their software to work with Segwit.

How Segwit Works

There has been a ton of misinformation about Segwit, so this article will hopefully clear some things up of how it actually works. As stated earlier the whole idea of a blocksize has been gotten rid of. Instead, the network will now use blockweight.

There’s two types of data that are contained in a transaction. Firstly, there is actual transaction data, such as the address the coins are being sent to. Then there is the witness data, which is all the information that is only needed when the transaction is confirmed, and then that data is essentially never used again.

Segwit provides a “discount” to the witness data, and once committed to the blockchain it gets pruned. These 1000 1KB transactions would obviously fill the current blocksize of 1MB, but remember blocksize isn’t even a metric any more. It’s been replaced by blockweight, the new limit of which will be set at 4,000,000 “units.”

The way the new unit system works is the number of units in a transaction is simply the number of bytes of transaction data multiplied by four. Witness data is, as said before, discounted. The bytes of the witness data are essentially a direct translation to units at a 1:1 rate.

So, for example, let’s say there’s 1000 transactions in the mempool, all at 1KB of data. Now let’s say in each of the transactions, 400 bytes is witness data and the other 600 bytes is transaction data. The 600 bytes for transaction data is now worth 2,400 units, while the witness data is now worth 400 units giving the whole transaction a weight of 2,800 units. All of these transactions together will only take up 2,800,000 of the 4,000,000 units, leaving room for more transactions.

Once the transaction is confirmed by the network, the not needed witness data will be pruned off the blockchain, to save storage space and decrease bandwidth use.

How Do I Actually Use SegWit?

For those of you expecting an immediate sign that Segwit is helping everything, I’m sorry to let you down. In reality, it could be weeks or even months before Segwit really starts to have widespread adoption.

Segwit transactions can only be sent from Segwit addresses. So, every single address that currently contains coins would have to send them to a Segwit address before we see the full effect of the upgrade. And even then, there could be a decent chunk of users who still don’t trust Segwit and don’t want to use it. Which is perfectly fine, that’s the point of a softfork. It doesn’t force users who don’t agree to it to upgrade to it.

For you to use segwit and send segwit transactions, you’ll need to send your coins to wallet that generates Segwit addresses. Otherwise, it will just be a normal transaction.

Moving forward, Segwit was an important setup to the upgrading and scaling of the Bitcoin network, which has been woefully overloaded in the past several months. Segwit opens the door to better implementation of the lightning network, which can allow for transactions to be sent off chain for pennies.

Coming in November, the second half of the New York Agreement is set to take place calling for a doubling of the blockweight to even further scale the network though means of a hardfork.

Will you be using segwit from here on in? How do you think this will effect the network? Let us know in the comments below!


Images courtesy of Shutterstock, Segwit.co

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Dub 14

Core Dev Maxwell: UASF ‘Does Not Measure Up To Standard’

· April 14, 2017 · 9:00 am

Bitcoin core developer Greg Maxwell has newly outlined why he “does not support” a user-activated soft fork (UASF) as it figures in BIP 148.


Maxwell: UASF ‘Guarantees Disruption’

In a circular to the Core mailing list Friday, Maxwell said that although he is not strictly against a soft fork, its incarnation in BIP 148’s UASF does not “really measure up to the standard set by segwit itself.”

The debate over whether to galvanize the entire Bitcoin ecosystem into Segwit activation via a UASF has gained considerable traction over the last month.

Proponents say it is the quickest way to move Bitcoin on from its current stalemate, yet detractors highlight its disruptive nature as a reason for caution. If a UASF occurred, for example, non-supportive miners would find their blocks invalid after the deadline, and would not receive rewards for their work.

Maxwell too notes that this “disruption” is a key difference between a UASF and segwit activation via miners.

“The primary flaw in BIP148 is that by forcing the activation of the existing (non-UASF segwit) nodes it almost guarantees at a minor level of disruption,” he continued. “Segwit was carefully engineered so that older unmodified miners could continue operating _completely_ [sic] without interruption after segwit activates.”

Time Still Not Of The Essence

Despite the increasingly slow and expensive nature of the Bitcoin network, Maxwell still advocates a measured approach without speed as a priority.

…The fastest support should not be our goal, as a community– there is always some reckless altcoin or centralized system that can support something faster than we can– trying to match that would only erode our distinguishing value in being well engineered and stable.

First do no harm.’ We should use the least disruptive mechanisms available, and the BIP148 proposal does not meet that test.

The developer has meanwhile found himself under fire lately from Bitcoin Unlimited proponents, notably Roger Ver, who released a dedicated presentation with quotes from Maxwell highlighting alleged errors.

“It’s important the users not be at the mercy of any one part of the ecosystem to the extent that we can avoid it– be it developers, exchanges, chat forums, or mining hardware makers,” Maxwell concluded.

Ultimately the rules of Bitcoin work because they’re enforced by the users collectively– that is what makes Bitcoin Bitcoin, it’s what makes it something people can count on: the rules aren’t easy to just change.

Meanwhile, Bitcoin’s recent price spike over $1,200 has been attributed by some to a sharp rise in the number of UASF-signaling nodes. Though this does not necessarily imply causation, the price has also dipped following the publication of Maxwell’s post.

What do you think about Greg Maxwell’s perspective on a UASF? Let us know in the comments below!


Images courtesy of uasf.org, twitter.com, shutterstock

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Bře 31

Adam Back to Jihan Wu: SegWit Not ‘Complicated,’ Fixes Satoshi’s Bug

· March 31, 2017 · 8:00 am

3,425 views

Hashcash inventor Adam Back has said Segregated Witness (SegWit) “fixes” an original bug in Bitcoin from creator Satoshi Nakamoto.


Back: SegWit ‘Fixes Satoshi Bug’

As part of a Twitter exchange Friday, Back rebuffed criticism from Bitcoin Unlimited proponent Jihan Wu, demonstrating how SegWit is beneficial to the virtual currency’s core protocol.

Wu, who is a co-founder of mining conglomerate Bitmain, had said that the technology would make the network “more complicated.”

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“SegWit is not more complicated,” Back wrote.

“It fixes Satoshi’s bug that txid=H(tx,sig) to txid=H(tx) this is not complicated, and it is necessary to fix.”

What’s more, if implemented, SegWit can can actually help reduce the so-called “technical debt” burden of complicated code albeit having its own tradeoffs, which are assessed here.

The segwit code has been heavily reviewed, which helps resist the introduction of technical debt at both a code and design level…Segwit has multiple independent reimplementations, which helps discover any unnecessary complexity and technical debt at the point that it can still be avoided.

SegWit: Complicated & Straightforward

Wu’s stance echoes a broader opinion from the Chinese community in particular that SegWit creates unnecessary complexity within Bitcoin.

In an interview with Bitcoinist this month, for example, Leon Liu, CEO of P2P trading service Bitkan, said that this was a reason why the technology “is not the best solution for Bitcoin scaling.”

“Segwit will not be the best solution for Bitcoin scaling, it will make the Bitcoin network more complicated,” he stated.

At the same time, efforts have been made to allay such fears, Blocktrail CTO Ruben De Vries commenting last year that SegWit “is not very complicated if you already know the ins and outs of the Bitcoin protocol.”

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Back meanwhile has praised attempts at educating the wider community on the nature of scaling solutions without resorting to ‘political’ siding.

An explainer on SegWit by Andreas Antonopoulos garnered considerable praise, Back describing it as “the best he’d seen on the topic.”

On its benefits, Antonopoulos wrote in the blog post, which originally came out in August last year:

“Firstly, segregated witness reduces the overall cost of transactions by discounting witness data and increasing the capacity of the bitcoin blockchain.

“Secondly, segregated witness’ discount on witness data corrects a misalignment of incentives that may have inadvertently created more bloat in the UTXO set.”

Litecoin Bounce on SegWit Rumors?

SegWit is traditionally considered ‘complicated’ compared to merely increasing the Bitcoin block size, despite the latter requiring a hard fork of the virtual currency.

Currently, the proposal is still behind Bitcoin Unlimited though both need at least 95% to activate.

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Outside the Bitcoin debate, rumors surfacing that Litecoin is to activate SegWit may have led to a surprise expansion in value of the altcoin by around 30%.

What do you think about the contrasting opinions on SegWit? Will it add complexity to Bitcoin? Let us know in the comments below!


Images courtesy of Shutterstock, Twitter

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Bře 07

Roger Ver Will Reward Miners 110% for Supporting Bitcoin Unlimited

· March 7, 2017 · 3:00 am

Roger Ver has launched a Bitcoin mining pool from his own Bitcoin.com brand which offers miners a 110% block reward.


10% Premium for Mining Bitcoin Unlimited

The entrepreneur and staunch Bitcoin Unlimited supporter unveiled the Bitcoin.com Mining Pool on Twitter Monday.

Described as “the world’s highest paying mining pool,” Bitcoin.com incentivizes miners to maintain Bitcoin Unlimited with a 10% premium – effectively turning Bitcoin into a proof-of-stake system. The pool currently comprises about 2.49% of the global hashrate. 

Replies to Ver’s Twitter announcement were predictably charged with the internal politics constantly following the Bitcoin scaling debate.

Disparaging reactions included accusations of Ver “centralizing” Bitcoin, as well as a vow to make miners stay away from pools championing Bitcoin Unlimited over Segregated Witness (SegWit).

More Harm Than Good?

Ver himself has created an increasingly controversial persona in recent months through his advocacy of Bitcoin Unlimited, which has been noted for its comparatively emotional style compared to other commentators.

His position has frequently been met with criticism and even ridicule, not only from lay consumers but well-known figures in the cryptocurrency industry.

Most recently, Tone Vays uploaded a list of altcoins Ver had “diversified into for better privacy & cheaper transaction costs.”

Spotlight USAF

The weekend meanwhile saw increasing debate over the idea of an alternative way of implemented SegWit. Despite the scaling solution receiving its equal rap of criticism, it is being suggested that a so-called user-activated soft fork (UASF) may be the safest and most popular way to provide an end to the deadlock.

“This is a true market solution where users (validating nodes and wallets) pick an activation date in the future and begin relaying segwit transactions,” an explainer from the Bitcoin & Markets podcast said last week.

“Since these are valid transaction to older clients (backwards compatible) there’s no issue with validating the transaction.”

Former BTCC COO Samson Mow even took to Twitter announcing a bounty of 1 BTC to the party able to generate code for a “safe UASF.”

The latest data from Coin Dance shows 25.9% of the Bitcoin mining network in support of SegWit, while Bitcoin Unlimited is slightly behind at 22.7%.

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Bitcoin’s mempool, the size of unprocessed transactions waiting in a queue, meanwhile continues to hover near all-time high levels.

What do you think about Roger Ver’s new mining pool? Let us know in the comments below!


Images courtesy of Twitter, Coin.dance, Shutterstock, alchetron.com

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Úno 08

Litecoin: SegWit ‘Testbed’ at Risk as Bitcoin Politics Spread

· February 8, 2017 · 8:00 am

The Segregated Witness (SegWit) update has received lukewarm support thus far since it was announced on Litecoin on January 28th.


Beyond Bitcoin: ‘Testbed’ for SegWit

After Bitcoin, the SegWit scaling update has now been introduced to Litecoin along with some other cryptocurrencies including Vertcoin, Groestlcoin, and Viacoin.

Right now, Litecoin miners are in the process of voting on the update. Currently at 3%, support is lower than it is in Bitcoin, which rapidly climbed up to 22% in its first two weeks.

Bitcoinist_Litecoin Logo

The vote has attracted the attention of the Bitcoin community. Litecoin (and other coins) could become a testbed for the potential SegWit soft-fork on Bitcoin, and could offer a sneak peek as to how this update fares in the real world. Moreover, SegWit may have better chances on Litecoin since its activation threshold is just 75% compared to Bitcoin’s 95%. 

But this “testbed” mentality may be part of the reason why Litecoin users are not so eager to activate the update, which would make them, in a sense, Bitcoin’s ‘lab rat.’ Dubbed the “silver to Bitcoin gold,” it currently has a market cap of about $198 million USD, which could be negatively affected if the update goes sour.

Creator: ‘Litecoin Became Political Too’

Nevertheless, the SegWit update is supported by Litecoin creator Charlie Lee.

charlie-lee-talks-about-litecoin-bitcoin-and-coinbase-22-640x360

In a recently held Reddit AMA (in Chinese), he stated:

Yes, it’s unfortunate that SegWit on Litecoin became political too. One of the reasons I’m doing this AMA is to try to pull the politics out of the Segwit on Litecoin. Let’s not let Bitcoin politics pollute Litecoin for no reason.

Meanwhile, LTC1BTC founder Jiang Zhuoer stated that his pool, which controls 10% of the network, will not support the SegWit update. His motives, however, seem to stem directly from the Bitcoin debate. 

“Why do the Bitcoin Core developers say that the Segwit soft fork basically fixes every line of Bitcoin’s code? Zhuoer said. “As the complexity of a system increases, it follows that the stability of that system must decrease.”

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Still, other pools have demonstrated their support for SegWit. F2Pool, the biggest Litecoin pool with 45.6% of the network’s hash rate, announced it will signal their support for SegWit in the coming weeks.

Litecoin Could Help Bitcoin Break Deadlock

Since Litecoin has a small number of users compared to Bitcoin, scaling is not exactly a pressing issue at the moment. Though SegWit was introduced to Bitcoin as a scaling solution, it also introduces additional features and paves the way for other upgrades such as the Lightning Network. 

Lee explained the motive for supporting SegWit saying,

The main fix is transaction malleability, which would allow Lightning Networks (LN) to be built on top of Litecoin. And there are a bunch more nice features of SegWit. With SegWit and Bitcoin’s current block scaling deadlock, I see a potential for Litecoin to help Bitcoin break through this deadlock[…]. We have been drafting behind the Bitcoin race car for many years. It’s about time to take a turn out front.

During the AMA, Lee also expressed his opinion regarding the alternatives that have been proposed, reassuring that Litecoin will stick to SegWit.

Litecoin roadmap

When asked what will Litecoin do if Bitcoin goes with Bitcoin Unlimited and FlexTrans, he said:

With such a controversial topic, I can’t see how Bitcoin can possibly go BU and FlexTrans. It will likely just not change, and that’s fine. It’s still the best store of value we have ever seen. Whatever happens, Litecoin is going the SegWit direction. And we welcome any Bitcoin Core devs to join us if Bitcoin, for some reason, goes in another direction.

Charlie Lee is currently holding another AMA thread on this topic (in english) here.

Will Litecoin pave the way for Bitcoin’s SegWit? Or will it fail to reach consensus?


Images courtesy of Shutterstock, Twitter, litecoinpool.org

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