MintDice Blog Post Image

A Guide to SegWit (Segregated Witness)

Learning about cryptocurrencies can be frustrating when things start getting technical and hard to understand. It doesn’t help when you have to learn a whole new lingo, and most of it is niche acronyms and words made up by techies.

If you’ve been researching Bitcoin, the largest cryptocurrency, chances are you’ve come across the term SegWit, which is a short way of referring to Segregated Witness. Many people are talking about SegWit and some think it may have the ability to solve or alleviate the scaling issues associated with Bitcoin and other blockchains.

We’re going to give you the fundamentals about Segregated Witness, how it can help with scaling and how it can impact you and your cryptocurrency wallets.

What is SegWit?

We’ve frequently touched on how Bitcoin has run into issues with the scalability of blockchain technology. For Bitcoin or any other cryptocurrency to be widely used and accepted as a payment method for everyday items and activities, transactions need to be processed quickly, and the costs need to be low.

Some cryptocurrencies have attempted to improve on Bitcoin’s protocol to alleviate the scalability issues. Dash has its InstantSend feature, and Litecoin and Bitcoin Cash are other forks from Bitcoin that allow for faster and cheaper transactions.

However, other people in the Bitcoin community have suggested other alternatives to deal with the blockchain’s scalability. Community members often propose recommended improvements through a formalized Bitcoin Improvement Proposal on Github.

SegWit was proposed through this method, and it was suggested that the Bitcoin protocol separate the transaction information in the blocks from the witness structure. Each new block takes about 10 minutes to create, so the goal for optimal efficiency is to increase the number of transactions in each new block.

The witness structure is the portion of the block where consensus is formed, and the miners and wallets on the network agree and validate transactions before signing and adding the block to the chain. Removing this information from the block opens up more potential storage space for transactions to be recorded on each block. Most of the community believes increasing block size, and the amount of transactions on each block is the best way to combat the scalability problems.

How do witness transactions work?


When you use SegWit to create a new transaction, you are essentially decreasing the size of your transaction. This SegWit protocol uses different measurements to determine the size of each transaction and the signature once they are separated.

A new unit of measurement is used under this protocol and applied to the signature portion of the block to reduce it to one-fourth of the previous size. Because the signature is the only portion of the block with the reduced size, the overall savings rate on block space is usually up to 50%. But this can effectively turn a 1 MB block size into a 1.8 MB block size, so there is some significant impact from SegWit.

How do you take advantage of SegWit?

To leverage the improved blockchain protocol using SegWit, you will want to use a SegWit enabled Bitcoin wallet.

Don’t worry if you haven’t made the jump to SegWit yet; your legacy wallets are still valid and functional. All transactions are still processed on the same blockchain. Older wallets without SegWit are subject to the higher transaction fees from the old protocol though.

What are the benefits of SegWit?

By far the biggest benefit of SegWit for users is the reduced transaction fees up to 50-70%. When you use a SegWit enabled Bitcoin wallet, you can choose and customize your transaction fee, which usually compromised speed and performance if you select lower rates, but SegWit transactions have been comparably fast thus far.

If SegWit enables miners to spend less time and effort mining new blocks, the overall cost for processing a single transaction will decrease. On top of the lower fee structure with SegWit, the Lightning Network applied to the Bitcoin blockchain will also rely on SegWit’s protocol. This is the speed along with the cost. The Lightning Network’s second layer built on Bitcoin’s blockchain will allow for instant payments, while SegWit reduces the fees.

The overall goal is to allow Bitcoin to become a payment method with quicker transactions and fractional fees, so users and merchants adopt digital currencies into their daily lives.

What are the best wallets using SegWit?

Now that you know a little more about SegWit, and the potential for lower cost transactions using SegWit enabled Bitcoin wallets, which one should you choose going forward for your Bitcoin and cryptocurrency transactions? There are a few quality Bitcoin wallets that are incorporating the SegWit protocol to take advantage of the new benefits.

Here are a few wallets to consider:

Ledger Nano S

While the Ladger Nano S stores Bitcoin along with Ethereum and a couple of dozen other cryptocurrencies, the SegWit capability only applies to Bitcoin transactions. This hardware wallet is a small device that looks like a USB drive with a USB that plugs into your computer. It’s equipped with an OLED screen for reviewing transactions.

Ledger hardware wallet has been an early supporter of the SegWit protocol and implemented it into the wallet when it first launched live on the Bitcoin network.


The Trezor wallet is another popular hardware wallet that supports both Bitcoin and a whole host of other cryptocurrencies. Security is one of the primary features with Trezor wallets, and the hardware device can serve as your two-factor authentication, so when you want to authenticate a SegWit transaction, all you need to do is plug in the Trezor wallet to your computer to complete the job.

Bitcoin Core

Bitcoin Core is a wallet available in desktop versions for Windows, Linux and Mac OS. This particular wallet has supported the SegWit protocol since version 0.13.1 (if you’ve been using Bitcoin Core and have an older version, update the wallet to get access to the benefits of SegWit). Once you have Bitcoin Core’s latest version, your computer becomes a node on the Bitcoin network and supports SegWit transactions.

Bitcoin Knots

Bitcoin Knots is another desktop wallet On Windows, Linux and Mac OS that supports SegWit integration along with other neat features for a cryptocurrency wallet. Bitcoin Knots offers users a wallet with an emphasis on security and privacy as well.


GreenBits is a mobile wallet for Android and iOS that supports SegWit protocol. If you are familiar with the GreenAddress wallet, this is the same company that’s providing GreenBits. This mobile wallet is easy to use for beginners and has good security practices. If you want to access from your browser, there is a Chrome extension so you can view the wallet from your computer.

Paper Wallet

Then, of course, there is the paper wallet option. You can SegWit enable your paper wallet if you're the type of person that takes every measure to keep your private keys and cryptocurrency as safe as possible. Simply print out your Bitcoin public and private keys, along with the QR code to scan and send Bitcoin, and you’ve got yourself a SegWit enabled paper wallet.

Final Thoughts

SegWit is one piece of the puzzle that helps achieve a faster and cheaper blockchain network. Using the SegWit protocol should help reduce the price burden of Bitcoin transactions as the network ramps up and sees more transactions on the blockchain. Users should consider moving to a SegWit enabled wallet if they haven’t done so already.

Bitcoin | Blockchain scalability | Blockchain size | Btc | Guide | Litecoin | Segregated witness | Segwit

Check out our games!

Wager cryptos with our provably fair casino games!