I am trying to help all those folks who are confused about this topic. You may be making money in the Crypto world but it is good to know a bit of tech that makes you rich.
In a nutshell, it is an improvement over the current bitcoin blockchain which reduces the size needed to store transactions in a block. This is done by removing certain signature with counting serialized witness data as one unit and core block data as four units.
The name stands for Segregated Witness. Segregate means to separate, and Witnesses are the transaction signatures. Hence, Segregated Witness, in short, means to separate transaction signature.
The increased capacity to store more transactions means lower transaction fee, more transactions per block = faster transactions. In addition to that, it would also fix transaction malleability, an attack that lets a person change a Bitcoin transaction’s unique ID before the transaction is confirmed on the Bitcoin network.
If you have the Legacy address then it means that you will be using addresses starting from 1… SegWit address means that you will be using addresses starting from 3… or bc1… (one is for P2SH nested SegWit and the other is for native SegWit). Note that 3… addresses are for P2SH addresses in general and are not just for SegWit. bc1… addresses are for SegWit specifically but not all wallets support it yet.
Yes, SigWit is a soft fork and it is backward compatible.
Yes. When you want to send money, transaction fees for spending a SegWit output will likely be lower from spending a legacy output.
No, there are no two chains. SegWit is activated on the Bitcoin blockchain. It is backward compatible.
SigWit2x stands for SigWit + 2X block size = 2MB. This fork was due to launch in 2017 but later canceled as not many miners supported this.
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Read more about how to build Bitcoin P2P Exchange here.