Topic: Why people should be using SegWit addresses (Read 1460 times)

Hey 1miau,

At the initiative of AOBT, your topic was also translated in Indonesian language by Husna QA.

I hope this is good news
If you are okay with the shape / quality of the translation, are you so kind, please, to add the translation to OP?

Hopefully added to OP with the Filipino translation under manage by GazetaBitcoin.

Which I believe he didn't requested for the translation from you. Am just trying to bring it to your notice if you can add it up to your list to avoid multiple translation in Portuguese,

-snip- I made a big mistake, I did the translations but I didn't tell you so you could update the official AOBT topic (i know, was my fault)

-snip-

Below is the list of translations in portuguese (please update the OP)

Why people should be using SegWit addresses

• Porque as pessoas deveriam usar endereços SegWit

Snip

Dear 1miau sir,

As you know I reserved my seat to translate your topic in my local Language Urdu.
And today I have completed my work. I have posted in my local community thread. Here is the link:

Bitcoin transaction fees are currently a bit lower compared to last week but still very high, of course, where saving every Satoshi is a good idea. 

I have completed translation and this my Translation link in Arabic language: https://bitcointalksearch.org/topic/segwit-5479946

Thanks @1miau for giving me a opportunity to translate this important topic into Arabic section. I hope to translate other your topics in future.

Hello @1miau I want to translate your topic in my local language in Urdu. Will you give me permission?

Please note: reserving new translations is not available currently.  

Re: Why people should be using SegWit addresses

Thank you 1miau!

I was happy to translate your topic, as it is a must-read for beginners in my opinion  

After paid2 translated my topic already some weeks ago, I've now added the French translation to my list as well:
-snip
Nice to have my topic in the French Bitcointalk section and many thanks @paid2 for providing a translation. 

Thank you for giving your consent to translate your thread. I'm pleased to inform you that the translation is completed and I will like you to have a look at it here https://bitcointalksearch.org/topic/m.63092260

Hello 

You have my permission to translate if of course.
SegWit is a very important topic of Bitcoin and it's also helping us to lower transaction fees. It's nice to get a translation for a topic about SegWit.

I've reserved your translation:

Language	translated by	Title
___________________________	_____________________	_______________________________________________________________________
Nigeria	knowngunman (reserved)	reserved

@1miau I will like to translate the op to pidgin in Nigeria local board with your permission.

Much appreciated, dear Gazetabitcoin. 

After diligent evaluation, I've come to the conclusion to arrange it like that: adding lines to "regroup" address formats, where native SegWit (bc1q...) and Taproot (bc1p...) are part of the same group

Yes, it's reviewed and updated now in my topic. 
Many thanks again for your valuable contribution. 

Hey 1miau, thank you for this long-waited update of OP Besides that, I'd also like to ensure you that all changes you brought to OP are now reflects in the translated topic as well.

In case you will add also a new table structure I will also make this change. But, until then, Romanian translation is 100% mirroring the original topic.

SegWit (https://en.bitcoinwiki.org/wiki/Segregated_Witness) was introduced 4 years ago and a main improvement of SegWit are lower transaction fees for transactions sent from SegWit addresses.

For Bitcoin addresses, different address formats exist. It is partly visible by having a look at their prefix:

Prefix	Category	Format
________	__________________________	_______________________________________________________________________________ _____________
1…	Legacy-Address	P2PKH (pay to public key hash)
3…	Multisignature-Address	P2SH (pay to script hash)
________	__________________________	_______________________________________________________________________________ _____________
3…	nested SegWit-Address	P2WPKH-P2SH (pay to witness public key hash - pay to script hash) / P2WSH-P2SH (pay to witness script hash - pay to script hash)
________	__________________________	_______________________________________________________________________________ _____________
bc1q…	native SegWit-Address (bech32)	P2WPKH-bech32 (pay to witness public key hash) / P2WSH-bech32 (pay to witness script hash)
bc1p…	Taproot-Address	P2TR-bech32m (pay to tap root)

Other than that, please check your PM, as I sent you a few minor suggestions about OP. I hope this helps.

Maybe you should not be differentiating Taproot from SegWit so "heavily".

bc1… Addresses starting with bc1q (native SegWit) and bc1p (Taproot)… Addresses starting with bc1p are always SegWit.

You are right, all bc1 addresses are segwit and that is what we should refer segwit as, but I think the main reason 1miau emphasized on bc1p is just for people to understand, especially newbies, that all bc1p addresses are segwit (that all pay-to-taproot addresses are segwit), which means P2TR is segwit.

Maybe you should not be differentiating Taproot from SegWit so "heavily".
I see Taproot a subset (more correctly it's a newer version) of SegWit. So bc1*, no matter it's bc1q, bc1p or other letters corresponding to the newer versions that'll come up (since that p or q after bc1 simply reflect the version of the bech32 address), the benefits should remain.

bc1p… Addresses starting with bc1p, are always SegWit.

I'm using Trust wallet as one of my main wallets so I can say that the address is not changing after making a successful transaction, it is permanent. And I didn't know that it was a close source.

How it is being determined if a wallet is an open or close source? How about Coinomi? Its addresses are changed after making a successful transaction.

I've updated the pictures where the usage of SegWit rose from 70% in August 2021 to 86% right now (July 2022):

What are the additional advantages of using a SegWit address?

In addition to lower transaction fees for your transactions, you’ll also help the Bitcoin network by using SegWit addresses, since more transactions will fit into one block. As a result, Bitcoin can process more transactions per second, which benefits all participants.

Any disadvantages?
This is because some websites are slow in performing updates and such sites don’t accept this new bech32 address format.

And it affects their profits. Remember that Binance charge an insane amount of bitcoin withdrawals in order to entice newbies who don't understand any better to buy their centralized scam tokens instead. If you can withdraw for free via Lightning, then they lose their insane withdrawals fees and they lose a large amount of volume on their scam chains.

I know this but I'm using truswallet only for daily transaction and I have tried to import the multiwallet private key and then multiple bitcoin address showed up. but it sill fine tho

Never mind this is not related to this thread. Trustwallet wallet is close source, the reason I do not use it anymore for bitcoin, I do not even think it has address change, is the Trustwallet address changing after making successful transaction? Because I did not see any address change on the wallet when I downloaded the wallet recently for testing.

... snip ...

The true option for lower fee option is the use of lightning network, but I am wondering why big exchanges like Binance and Coinbase are not yet supporting it when there are many exchanges that accept bitcoin lightning payment.

Because they don't care. It took them years to implement support for native segwit addresses, which is trivial to do, easily compatible with all their existing infrastructure, and completely safe. It will take them even longer I'm sure to implement Lightning support, given that it requires them to set up brand new infrastructure and still has a number of bugs and issues being worked on. And it affects their profits. Remember that Binance charge an insane amount of bitcoin withdrawals in order to entice newbies who don't understand any better to buy their centralized scam tokens instead. If you can withdraw for free via Lightning, then they lose their insane withdrawals fees and they lose a large amount of volume on their scam chains.

~snip~

Even more, I think that most exchange are taking it slow with LN because those huge fees also make users consider keeping their coins in exchanges' custody (I've read a good number of times that people keep their money here and there because their friends also have money on the same platform and sending bitcoins to each other is free. Of course, they don't realize that it's off chain and the implications).

Because they don't care. It took them years to implement support for native segwit addresses, which is trivial to do, easily compatible with all their existing infrastructure, and completely safe. It will take them even longer I'm sure to implement Lightning support, given that it requires them to set up brand new infrastructure and still has a number of bugs and issues being worked on. And it affects their profits. Remember that Binance charge an insane amount of bitcoin withdrawals in order to entice newbies who don't understand any better to buy their centralized scam tokens instead. If you can withdraw for free via Lightning, then they lose their insane withdrawals fees and they lose a large amount of volume on their scam chains.

The true option for lower fee option is the use of lightning network, but I am wondering why big exchanges like Binance and Coinbase are not yet supporting it when there are many exchanges that accept bitcoin lightning payment.

im also using segwit address when send from trust wallet to BInance because lower fee I think is same with ethereum although the other chain-like bnb or polygon give more less fee. segwit still great for daily transaction and I think more and more exchange will accept it

https://transactionfee.info/charts/payments-spending-segwit/
Currently around 86%.



https://transactionfee.info/charts/inputs-types-by-count/

My point is that maybe we should somehow "pressure" the services into SegWit, instead of teaching over and over again the individuals...
I don't know how though.

a main improvement of SegWit are lower transaction fees for transactions sent from SegWit addresses.

After 5 years it is no longer considered "slow" it is either malice or incompetence.

The percentage of fee reduction depends on number of outputs as well. With higher number of outputs, the percentage of fee reduction decreases.

Your table is a weird categorization of addresses. Basically addresses starting with both 1 or 3 are legacy addresses. Also referring to those starting with 3 as "multi-signature addresses" is a bit misleading because those are P2SH (Pay to Script Hash) addresses and that's all we know. The "script" that was hashed can be anything from legacy scripts including multi-sig scripts, time-lock scripts, or any other complex smart contracts or witness programs of any version although only version 0 (P2WPKH and P2WSH) are standard.

After 5 years it is no longer considered "slow" it is either malice or incompetence.

You can follow adoption of different address formats including bech32 for wallets, exchanges, explorers and other services in this wiki page:
https://en.bitcoin.it/wiki/Bech32_adoption

With higher number of outputs, the percentage of fee reduction decreases.

If you have used Bitcoins on some centralized services and now want to send them to your own bech32 SegWit address, it’s possible, that the centralized service won’t recognize your bech32 address and will reject it as invalid. This is because some websites are slow in performing updates and such sites don’t accept this new bech32 address format. However, this only applies to bech32 addresses, but not nested SegWit, which is compatible everywhere and more services will fully support bech32 sooner or later.

it’s possible, that the centralized service won’t recognize your bech32 address and will reject it as invalid. This is because some websites are slow in performing updates and such sites don’t accept this new bech32 address format.

What are the additional advantages of using a SegWit address?

What is SegWit?
Segregated Witness (SegWit) is a protocol upgrade developed in 2015. The concept was introduced as a solution to the scalability problem that blockchain networks were and are still facing today.

On average, the Bitcoin network validates a new block every 10 minutes, each containing several transactions. As such, the block size affects the number of transactions that can be confirmed in each block. Currently, the Bitcoin blockchain can process around 7 transactions per second.
SegWit’s main idea is to reorganize block data so that signatures are no longer placed along with transaction data. In other words, the SegWit upgrade consists of segregating the witnesses (signatures) from transaction data. This allows for more transactions to be stored in a single block, increasing the transaction throughput of the network.

By only being able to process about 7 transactions per second, a Bitcoin transaction can sometimes take a long time to go through. That's a lot slower when compared to conventional payment solutions and financial networks, which can process thousands of transactions per second.

SegWit was developed in 2015 by Bitcoin developer Pieter Wuille, along with other Bitcoin Core contributors. In August 2017, the SegWit upgrade was implemented as a soft fork on the Bitcoin network.
Today, several cryptocurrency projects are using SegWit, including Bitcoin and Litecoin. The protocol upgrade brought up many benefits, such as improved transaction speed and block capacity. Also, SegWit solved the so-called transaction malleability bug (discussed below).

What are the main benefits of SegWit?
Capacity increase
One of the biggest benefits of SegWit is the increase in block capacity. By removing the signature data from the transaction input, more transactions can be stored within a single block.

Transactions consist of two main components: inputs and outputs. Essentially, an input contains the sender's public address, while the output contains the public address of the recipient. However, the sender must prove that they have the funds being transferred, and they do so with a digital signature.
Without SegWit, the signature data can take up to 65% of a block. With SegWit, the signature data is moved away from the transaction's input. This causes the effective block size to increase from 1 MB to about 4 MB.

Note that SegWit is not an actual block size increase. Instead, it is an engineering solution to increase the effective block size without having to increase the block size limit (which would require a hard fork). To be more specific, the actual block size is still 1 MB, but the effective block size limit is 4 MB.

Also, SegWit introduced the idea of block weight. We may consider block weight as a concept that replaces the idea of block size. Essentially, block weight is a measure that includes all block data, including transaction data (1 MB) and the signature data (up to 3 MB), which is no longer part of the input field.

Transaction speed increase
With a block that can store more transactions, SegWit also has the ability to increase transaction speed, since there can be a larger amount of transactions moving through the blockchain. Even though a block may take the same amount of time to mine, more transactions are being processed in it, so the TPS rate is higher.
Increased transaction speed has also helped reduce transaction costs in the Bitcoin network. Before SegWit, it wasn't uncommon to spend over $30 per transaction. However, SegWit has dropped that cost dramatically to less than $1 per transaction.

Transaction malleability fix
A major issue with Bitcoin was the ability to potentially tamper with transaction signatures. If a signature is altered, it could result in a transaction between two parties being corrupte :-Xd. Since the data stored on blockchains are virtually immutable, invalid transactions could be permanently stored on the blockchain.

With SegWit, signatures are no longer a part of the transaction data, which removes the possibility of altering this data. This fix has allowed further innovation within the blockchain community, including second-layer protocols and smart contracts.

SegWit and the Lightning Network
The development of second-layer protocols was partially enabled by fixing the transaction malleability bug. Simply put, second-layer protocols are new platforms or products that are built on top of a blockchain, such as Bitcoin. One of the more popular second-layer protocols is the Lightning Network, an off-chain micropayment network.

The Lightning Network is a second-layer protocol that operates on top of the Bitcoin network. The Lightning Network's main purpose is to allow more transactions to be confirmed in a shorter amount of time, resulting in faster transactions for users. Transactions are collected off-chain and effectively buffered for the Bitcoin network to eventually process.

The Lightning Network was originally developed for Bitcoin. However, several other cryptocurrency and blockchain projects are working on implementing the technology for their networks. This will not only reduce the confirmation time transactions but also foster the development of new solutions to the scalability problem.


SegWit vs. SegWit2x
SegWit is a soft fork upgrade, meaning that it is backward-compatible. In other words, Bitcoin nodes that are not updated to include SegWit are still able to process transactions. However, there was another proposed SegWit implementation called SegWit2x (S2X), which would require a hard fork upgrade.
The key difference between SegWit and SegWit2x is that the latter would have not just included a change in transaction batching, but also an increase in the block size (from 1MB to 2MB). Still, a larger block size would increase the burden on node operators and miners, as there would be more data to be handled.

Another notable difference is that the SegWit proposal was supported and enforced by the Bitcoin community. The episode gave birth to the concept of UASF, which stands for user-activated soft fork.
On the other hand, the SegWit2x proposed a substantial change to one of the fundamental rules governing Bitcoin. But since developers were unable to come to a consensus on its adoption and implementation, the SegWit2x movement was ultimately suspended.

Nested SegWit vs. Native SegWit (bech32)
In short, Native SegWit (also known as bech32) is an updated version of the Nested SegWit. The bech32 format offers increased transaction speed, better error-detection mechanisms, and even lower transaction fees. Also, bech32 addresses are lowercase, making them easier to read.

Note that blockchain transactions between non-SegWit (Legacy), Nested SegWit, and Native SegWit (bech32) addresses are fully compatible. However, not all exchanges and crypto wallets support SegWit, so you might not be able to withdraw funds directly to a SegWit address.

Closing Thoughts
The implementation of SegWit marked the biggest protocol upgrade of Bitcoin, and the fact that it was supported and implemented by the decentralized community makes it even more interesting.
The introduction of SegWit was a major step forward in solving many problems related to Bitcoin and other blockchain networks - especially in regards to scalability. Through the combination of SegWit and the second-layer protocols, blockchain networks can handle a larger number of transactions, with more efficiency and lower costs.

Despite being a powerful and innovative solution, SegWit is yet to be fully adopted. Currently, the percentage of Bitcoin addresses using SegWit is around 53%.

Savings when sending from a nested SegWit address (3...) compared to a normal legacy address (1...) are 26% +.
Savings when sending from a native SegWit address (bc1q...) compared to a normal legacy address (1...) are 38% +.
Depending on the number of inputs to the address, savings are variable, with a higher number of inputs saving even more in percentages.

Never mind this, about native segwit (bech32) addresses which starts from bc1, P2WSH is also multisigature and yet segwit, if I am wrong you can correct me) but I only see this as multisigature both on Electrum wallet and while tracking such addresses on blockchain. Which means, it supposed to be part of the multisigature address along with the P2SH.

Also, Taproot have a lot to offer, Taproot will be activated mostly likely in November and some Bitcoin wallet update will support it, it also has low transaction fee, but it will favour many inputs, if the inputs of a transaction is more, the transaction fee will be cheaper than that of native segwit, but it will be otherwise if the output of a transaction is more, if the output of a transaction is more, segwit will have cheaper fee. And if comparing both input and output of a transaction together, segwit will only still have slightly cheaper fee that Taproot (but very little which may not that be significant), but as you know, Taproot is a big upgrade that is coming that Bitcoin users can use to take advantage of cheaper fee, especially for many input with one to few output transactions, and most especially for multisig transactions.