Steemit Crypto Academy | Homework - Task 3 by @gbenga | Segwit Bitcoin Network or Legacy Bitcoin Network, which do you prefer and why?
Task
What is SegWit Bitcoin Network?
On the 23rd of August 2017, there was a Bitcoin (BTC) protocol upgrade which helps to reduce the size of each transaction’s data. The logic behind the upgrade was to separate certain data of the transaction signature from the transaction. The update named "SegWit"
- SEG - Segregate - means to say separate
- WIT - Witnesses - Signatures of a transaction
But was it that much significant to SegWit (Separate Signatures of a transaction) !
It did indeed,
As Bitcoin’s price got skyrocketed more traders wanted bitcoins. The fees paid for a transaction got pricey while the speed went on to the slower side. Once speed is low fraudulent activities went high. That is where such implementation was needed. SegWit was able to make the transactions lighter in size and transactions got faster, This allows each block to have extra capacity to store more transactions per block, hence a single Bitcoin block can fit more transactions now. This resulted Bitcoin network being more scalable. More importantly, this update helps to lower the Transaction Fee with added security.
What is Legacy Bitcoin Network?
Legacy Bitcoin Network was the original Bitcoin network since its inception. That means the network we were using is more than 10 years old now and wanted a better upgrade. That's what happened with SegWit. However, in the crypto world, you can find three different address formats when you are doing transactions.
- Legacy (P2PKH): addresses start with a 1.
- Nested SegWit (P2SH): addresses start with a 3.
- Native SegWit (bech32): addresses start with bc1.
No matter which address type you have still you can send and receive bitcoin. However, some wallets might not support all three address types as they are not updated to SegWit update. Legacy addresses have been on the market for so long we can expect that Legacy addresses will work on any wallet.
Conclusion - What I prefer?
I probably choose the updated version, SegWit, though it has this problem with some wallets not supporting the transaction I still believe lower transaction fees & added security is something to concern. Moreover, SigWit is a soft fork and they are backward compatible, this will allow to send funds from a SegWit address to a Legacy address where you won't find any issue choosing SegWit.
Thank you Steem Team & @gbenga for sharing this knowledge.
I look forward to the 04th lesson of this exciting course.
#steemitcrypto #gbenga-week3 #cryptoacademy #srilanka #steemexclusive #steemitblog