The "SegWit" upgrade went live on the Bitcoin core software

On August 24, 2017, a significant upgrade to the Bitcoin network known as Segregated Witness, or SegWit, was activated at block height 481,824. This marked a major milestone in the evolution of Bitcoin, introducing a new transaction format that aimed to increase network capacity and improve scalability.
 

SegWit was first proposed by Bitcoin Core developer Pieter Wuille in December 2015 and was codified as Bitcoin Improvement Proposal 141 (BIP141). The primary goals of SegWit were to fix transaction malleability, a bug that allowed for the alteration of transaction details that could potentially lead to double spending, and to make block size limits more flexible.
 

The activation of SegWit was the result of a long-standing debate within the Bitcoin community on how to scale the network. It was a soft fork, meaning it was compatible with the existing Bitcoin protocol, and nodes that did not upgrade would still be able to participate in the network.
 

One of the key technical changes introduced by SegWit was the separation of signature data (the “witness”) from the transaction data. This not only solved the malleability issue but also effectively increased the block size limit by allowing more transactions to fit into a single block without changing the block size limit of 1MB.
 

The activation process of SegWit was complex and involved multiple stages, including a signaling period where miners would indicate their readiness to enforce the new rules. The final activation was a significant event, as it demonstrated the ability of the Bitcoin community to reach a consensus on a major network change.
 

Following the activation of SegWit, the Bitcoin price saw a notable increase, rising almost 50% in the week following its activation. This reflected the market’s positive response to the upgrade and its potential to enhance the network’s performance. SegWit also laid the groundwork for future developments on the Bitcoin network, such as the Lightning Network, which aims to enable faster and cheaper transactions by moving them off-chain.