Crypto Academy Week 3 Homework Post for @gbenga
Hello steemians , I hope you all are doing very well.
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 a digital currency that was created in January 2009. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous Satoshi Nakamoto.1 The identity of the person or persons who created the technology is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralized authority.
Bitcoin is a type of cryptocurrency. There are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to. All bitcoin transactions are verified by a massive amount of computing power. Bitcoins are not issued or backed by any banks or governments, nor are individual bitcoins valuable as a commodity. Despite it not being legal tender, Bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as "BTC."
What is Segwit Bitcoin Network ?
The main purpose of SegWit is to improve transaction throughput on a blockchain network. It is worth noting that the first cryptocurrency to implement the SegWit layer was not Bitcoin, but Litecoin.
In essence, SegWit reduces the weight of transactions in a block on the blockchain by segregating a transaction into two sections; effectively increasing the amount of transactions one can include in a block of the same size.
The first part of a transaction contains the wallet addresses of the sender and receiver and the second part contains the “witness data” containing transaction signatures. SegWit removes the “witness data” from the main block, therefore notably reducing transaction size. The transactions consequently require less space, enabling more transactions per block and greatly increasing the capacity of the Bitcoin network.
The first part of a transaction contains the wallet addresses of the sender and receiver and the second part contains the “witness data” containing transaction signatures
Why use SegWit?
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 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 helps to improve your transaction confirmation lead time with added security.
Another advantage of SegWit is that they are backwards compatible, meaning that you are able to send funds from a SegWit address to a Legacy address
benefit of SegWit
The increased capacity to store more transactions means lower transaction fee, more transactions per block = faster transactions. In addition to that, it would also fix transaction malleability, an attack that lets a person change a Bitcoin transaction’s unique ID before the transaction is confirmed on the Bitcoin network.
What is Legacy Bitcoin Network?
Legacy addresses are the original BTC addresses. You can expect all wallets to support sending and receiving to Legacy addresses. However, not every wallet or service has upgraded to support the new SegWit address format and therefore, some wallets can only send to Legacy addresses.
What is the difference between SegWit and Legacy address?
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 is better?
After comparing Segwit and Lagacy , I think Segwit is better than Lagacy . Because by separating the transaction signature from the transaction data , It reduces the size of the transaction data needed to store in one block. AS Segwit was invented in order to help reduce the file size.
Another advantage of SegWit is that they are backwards compatible, meaning that you are able to send funds from a SegWit address to a Legacy address. it is also very fast and it cost very low transaction fee.
I never meant to mention that Legacy addresses are not good. It is totally up to you!