Crypto Academy Week 3 Homework Post for @gbenga
Hello steemians, how are you all? I really hope that you all are doing really Great, In this post , I am here to submit my homework task 3 which I have carried out as required by @gbenga, crypto professor.
Segwit Bitcoin Network or Legacy Bitcoin Network, which do you prefer and why?
What is Bitcoin?
Bitcoin is the name that everyone knows today. Today we will do some important things about this. Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks! Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock and buy Xbox games.
But much of the hype is about getting rich by trading it. The price of bitcoin skyrocketed into the thousands in 2017. Bitcoin has several attributes that set it aside from traditional currencies as a pan-global means of exchange. Central banks or monetary authorities do not control the number of Bitcoins, and it is decentralized, making it global. Anyone with a computer can set up a Bitcoin address to receive or transfer bitcoins in seconds. Bitcoin is anonymous, and the cryptocurrency allows users to maintain multiple addresses, and setting up an address requires no personal information.
In today's time, we can use Bitcoin in many things. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.
What is Segwit Bitcoin Network
SegWit is short for Segregated Witness. It was perhaps the biggest Bitcoin protocol upgrade to date, which wrapped several improvements and fixes into one.
SegWit is a change in Bitcoin’s protocol
SegWit was pushed through in a soft fork of the original Bitcoin network after the Bitcoin scalability debate reached its peak in late 2017
Bitcoin Cash is arguably the main competitor supported by the other fraction
Presently, SegWit is a scaling solution used by several different cryptocurrency networks including Litecoin
What Are the Benefits of SegWit?
As probably its most notable fix, SegWit got rid of transaction malleability. Before SegWit, an oddity about Bitcoin’s cryptographic signatures made it such that transactions could be tweaked to “look” different, even by people who hadn’t themselves created the transaction.
While this wouldn’t make the transaction invalid or change what it did it would still send the same amount of coins from the same addresses to the same addresses it severely complicated the deployment of layer two protocols like the Lightning Network.
SegWit solved this problem by moving the “witness” data of a transaction, which includes the signature, to a new part of a Bitcoin block. As such, it paved the way for the Lightning Network and other layer two protocols.
What are the downsides of SegWit?
Despite the fact that SegWit transaction adoption in the Bitcoin network is increasing and reached an all-time high of more than 65% at the beginning of 2020, possible adaptations of the Bitcoin network take a much longer time than those in altcoin networks, owing to the sheer significance and size of Bitcoin - there is too much at stake. On another note, not everyone supports SegWit transactions, even now.
The continuous scaling debate has likely been the main reason behind several hard forks off the Bitcoin blockchain over the last few years. The most prominent of these forks was the Bitcoin Cash hard fork, which took place on 1 August 2017. Bitcoin Cash forked again on 15 November 2018 and increased the network’s block size limit from 1MB to 8MB.s
Why is SegWit good?
The main benefit of separating the transaction signature from the transaction data is it reduces the size of the transaction data needed to store in one Bitcoin block. This allows each block to have extra capacity to store more transactions per block. This means the network can process more transactions per block and the sender pays lower transaction fees. This helpsfaster transactions as well as added security. Basically, use your SegWit address to receive deposits if you want lower fees when it's time to send the BTC out.
Another main benefit of SegWit addresses is that they are backwards compatible, meaning that you are able to send funds from a Bitcoin SegWit address to a Legacy Bitcoin address.
Difference between Segwit and Lagacy
Legacy address is the original BTC address while SegWit is the newer address format with lower fees.
SegWit means Segregated Witness, where Segregated is to separate and Witness is the transaction signatures involved with a specific transaction. In a nutshell, it is an improvement over the current bitcoin blockchain which reduces the size needed to store transactions in a block.
Which should you choose?
It is totally up to you!
Keep in mind that sending to your bc1 SegWit address may not work if the service does not support it. Thankfully you can just send to your Legacy Bitcoin address and the funds will end up in the same wallet! You have to decide.