SegWit (Segregated Witness)

SegWit, short for Segregated Witness, is a Bitcoin upgrade that activated on 24 August 2017 as a soft fork. It moved the signature data (the "witness") into a separate part of each transaction that is counted at a discount.

SegWit did two important things. It fixed transaction malleability, a bug that let third parties change a transaction's ID before confirmation, which was a prerequisite for the Lightning Network. And it replaced the old 1 MB block size limit with a limit of 4 million "weight units", raising effective capacity without a hard fork. Fees are now measured in satoshis per virtual byte (sat/vB) because of this weighting.

SegWit introduced new address formats, including native SegWit (bech32) addresses that start with "bc1q". Using SegWit addresses typically lowers fees compared with legacy addresses beginning with "1". The fight over SegWit and bigger blocks was a major reason for the Bitcoin Cash hard fork in 2017.