By
Chimamanda U. Martha
April 25th, 2024
Bitcoin price reaches new all-time high $3,484 superseding SegWit’s activation scheduled on Wednesday. The in fighting over cryptocurrency’s future seems to be resolved.
According to the CoinMarketCap’s Bitcoin Price Index the price of Bitcoin has pushed past its previous high of $3,384 to reach new all-time high $3,484 less than two days before Segregated Witness (SegWit) lock-in, continuing the upwards move which began Saturday night when Bitcoin crossed $3000 line.
On Wednesday morning the Bitcoin software upgrade SegWit, also known as BIP 141, will lock-in. A previous Bitcoin improvement proposal, labeled BIP 91, was activated on July 20, causing the network to automatically reject any blocks that are not signaling for SegWit (BIP 141) activation. Thus, this very date signaled the predetermined character of Segregated Witness upcoming activation.
Of course, the new system won’t be enacted in the twinkling of an eye. There will be a two week waiting period before full activation, during which miners will have the possibility to upgrade their software. Those who have done it successfully will be able to create blocks that will enforce the new rules after waiting period ends on August, 21. On the other hand, those, who will fail to upgrade during this period of time, will be at risk of losing their rewards, since their blocks would be rejected by other miners.
Worth mentioning, that it’s still unclear how long it will take the change to spread over the entire crypto ecosystem and how much time it will require to be adopted by all members of the network infrastructure.
The significance of SegWit’s lock-in
First of all, SegWit’s activation may serve as a turning point in network development characterized, at least, by adding of scaling-related tech to the network.
Along with that, SegWit offers new features that will be seen when after its full activation. Among others these include:
- Reduced Unspent Transaction Output (UTXO) growth will help network performance, fees, and allow for faster scaling.
- Script versioning makes Bitcoin’s code safer to upgrade by adding a version number to future changes. Sidechains, drivechains, the Lightning Network, Schnorr signatures, Key recovery, and Merklized Abstract Syntax Trees (MAST) will all be non-contentious upgrades allowing Bitcoin to scale further, without need for hard fork.
- Linear scaling of sighash operations provides far better scaling opportunities without sacrificing security as each byte will need to be hashed only twice (currently it’s four times) when transaction signatures are calculated.
- Multi-signature transactions will gain greater protection through unhackable Pay-to-script-hash (P2SH) Security boost.
Still the most significant change that SegWit initially offers is enlarged number of transactions. This change is hardly needed, as Bitcoin is currently able to handle 3 to 7 transactions per second, but if it intends to serve a global user base the network needs to be able to process many thousands of transactions. Despite the Bitcoin network will see enhancement in transaction capacities after SegWit has been activated, it will still need scaling solutions for future development.
The market seems to be reacting favorably to the upcoming changes. SegWit supporters state that its activation makes room for projects that bring added capability to the entire bitcoin network, and it is now blue skies of opportunity in what can be built.