Bitcoin is far from perfect. It has several shortcomings that we should address. The first section of this chapter will explain some of these shortcomings. Among the most critical are transaction malleability and inefficiencies in signature verification. We’ve already mentioned transaction malleability in the “Time-locked transactions” section in chapter 9—someone might change a transaction in subtle, but valid, ways while it’s being broadcast, which will cause its txid to change.
A solution to these problems was presented at a 2015 conference on Bitcoin scaling. This solution is known as segregated witness (segwit), which is a weird name for moving signature data out of transactions. I’ll describe this solution in detail: it includes changes in pretty much all parts of Bitcoin, including Bitcoin addresses, transaction format, block format, local storage, and network protocol.
Because segwit was a pretty big change in Bitcoin, it wasn’t trivial to deploy without disrupting the network. It was carefully designed so old software would continue working and accepting segwit transactions and blocks, although without verifying certain parts of them.