With technology, almost everything tends to shift. Financial transactions, for that matter, cannot be an exception. After the internet stole the show in the technology-savvy society, bitcoin entered the scene as a digital currency. Bitcoin users are a growing population. One of the latest apps introduced to Bitcoin users is Samourai, a digital wallet built to protect the privacy of financial transactions and the users identity. Privacy activists from various walks of life constitute the team who produced the Samourai wallet. They recently initiated an awareness program to support SegWit – short for Segregated Witness – on their Samourai platform. This call surfaced as a result of the prediction that miners would turn down the soft-fork on unfounded grounds.
What is the role of a miner? Bitcoin mining involves adding transaction records to a public ledger maintained to keep a history of transactions. This ledger is commonly known as the blockchain. The blockchain is useful especially when bitcoin nodes are used to cross-check transactions. The nodes inquire whether a transaction is genuine or a mere re-spending of coins already utilised somewhere else.
Any transaction shall have three major elements: sender, recipient and signatures. In the digital sphere, this consumes space. SegWit’s solution to this is to increase the current 1MB block size limit to four million units of block weight. That moulds kind of a revolution for the digital currency.
If miners would not accept the new solution, the team at the Samourai Wallet goes on to mention that they would continue to persuade bitcoiners to take a firm stand and activate SegWit. The team added that the Samourai Wallet nodes also look forward to BIP148 and user-activated softforks (UASF).
BIP 148 is a program proposal forwarded by the Samourai team. It has been introduced with the objective of promoting and improving the bitcoin usage along with a number of other wallet platforms. Titled “Mandatory Activation of SegWit Deployment“, the proposal intends to encourage the usage of user-activated softforks.
With this system in place, the users do not have to depend on miners hash rate allocation (the estimated number of tera hashes per second that the Bitcoin network is performing), they will be able to opt for a compulsory activation of SegWit. Interestingly, SegWit conquers where increased capacity matters. But that is not the only benefit.
According to Shaolin Fry, who drafted the project proposal, the software would augment the size of the block in addition to shaping the transaction flexibility. With this scripting properly in place, bitcoin users can look forward to many benefits. Fry keeps his fingers crossed that the miners will react positively to the BIP by activating SegWit at the earliest possibility. If not, the BIP will lead to the compulsory activation of the current SegWit deployment, which will be in effect from November 15.
SegWit also solves the transaction flexibility concerns. This concern surfaces because signatures are required to protect the user identity. SegWit’s answer to this is getting rid of signatures from the transaction ID data. Further, changing the signature data will be made impossible, preventing transaction malleability. The data remains sealed. The transactions thus can be performed through separate channels such as Lightning Network. This could be performed already but poses a significant risk because the transactions could be easily manipulated as long as SegWit is not active.
Unfortunately, most mainstream bitcoin miners did not respond positively as of now. And that is not without reason. SegWit’s new solution would block the fees from being channelled to the miners despite bringing more security for transactions. As long as SegWit is not in force, this will leave room for exploitations and other unnecessary transaction flexibilities. Worse still, it will affect ASICBoost.
The true motive of Bitcoin Unlimited in promoting against SegWit however remains a mystery even today. According to professionals, that support could be accredited to the clandestine use of ASICBoost. This could be a potential reason why some mining pools support Bitcoin Unlimited. If the miners are still using ASICBoost, the implementation of SegWit will cause a gigantic drop in profits.
On a different note, a number of mining pools in China tend to believe that two-layer solutions cause a significant revenue loss. Lightning Network is a prominent two-layer solution. On the contrary, however, the two-layer solutions could be used to boost mining revenue. The transactions performed earlier, on the other hand, can be settled through a Lightning chain. A private (side-)chain, which exists outside the main-chain, will be used for this. With this, the miners will be entitled to incentives too.
SegWit activation requires heavy campaigning as well as proper awareness to allay the unnecessary fears of the miners. Right now, there are many quarters up for that task. Various business personalities, entrepreneurs, development teams, organisations as well as a sizeable portion of the miners have expressed their keen interest in SegWit. They are also engaged in various debates. The number of individuals supporting the SegWit cause is increasing.
Further, with solutions such as BIP148, the SegWit activation stands a better chance.
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