I have been continuing my journey of learning crypto and lately there has been a lot of talk about Segwit and August 1st. I decided to see what I could figure and wanted to make a quick post on what I discovered as best I can at this point. I am hoping that the Steemit community can help shed some light where I far short on my information.

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Bitcoin Transactions are LOOONNNGGG ⏳

One of the issues with Bitcoin is the time it takes to complete a transaction. The reason for this seems pretty simple (unless I am missing something). Bitcoin blocks are created every 10 minutes and added to the blockchain and they can have a total size of 1MB. So this limits how many transactions can be recorded on that block. From what I have read this amounts to between 4 - 7 transactions per second.

It makes sense that as Bitcoin gets more popular and more transactions are made then the time to confirm a transaction could be hours or even days. If hundreds or thousands of transactions are being made at the same time then you could be waiting forever to get yours to be finally confirmed. The blockchain forces this and it is definitely a scaling issue for this currency.

• Blocks are at most 1MB in size.
• Blocks are created every 10 minutes.
• Blocks can hold 4 - 7 transactions per second.
• A limited amount of transaction can be processed at any time.

Bitcoin Fees are Not Cheap 🤑

Bitcoin transactions have fees attached to them to reward minors for including it in the block. We already know that the block size is limited to 1MB and not every transaction that is being created can fit in the next block. These fees are how the miners determine what transactions they are willing to include and another reason why you might have to wait hours or days for yours to be completed.

It come down to a simple mater of supply and demand. If you are willing to pay $3 in fees for your transaction and I am only willing to pay $1 then miners have more incentive to include your transaction in the next block. As more and more people perform transactions and we are limited by the 1MB and 10 minute time frame, it will cause the average fee price to continue to climb.

• Miners get rewarded from fees on transactions.
• Transactions with higher fees are processed first.
• Transactions with low paid fees can take days to process.
• Supply and demand causes the base fee price to increase.

THE PROBLEM 👎

These two issues (long transaction time & rising fees) seem to be the main problems facing Bitcoin and is hopefully not an oversimplification of what is going on. There is also a lot of politics going on with Bitcoin from what I am reading, but I am not going to get into those details.

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The "SOLUTIONS" 😎

Segwit

If you read up about Bitcoin right now you are going to run into Segwit which seems like a confusing made up word. It stands for Segregated Witness. In transactions there are three key elements. The sender address, receiver address and the signatures (commonly referred to as witnesses). So we know that to segregate means to separate and a witness is the the signature which contains data about the miner and the previous block.

So what does Segwit do?

The best I can understand on this topic is that Segwit performs some calculations to separate the digital signature from the transaction data. Digital signature accounts for 65% of the space in a given transaction so this helps free up space and allows for more transactions on a block. This also increase the size from 1MB to up to 4MBs which is still confusing to me. (I don't quite understand how it can increase this size and work honestly) My understanding is that if the digital signature is detached then you could not change the transaction amount without also impacting the validity of the signature. Therefore it is still protected even though separated.

95% Adoption Needed

So Segwit is a change in how Bitcoin operates and needs to be accepted by 95% of the mining community before it would go into effect. (This is how it was designed) This means that the majority of people would need to be using this updated version for it to be the new way to secure transactions. Again, my understanding is that there is a year countdown for it to move forward or it doesn't happen. Right now I think we are about halfway into that time period and adoption is not there yet. You can see the adoption of Segwit here. We are not at adoption yet.

(Although this article claims that adoption has happened today.)

BIP148

So we have Segwit and it seems to solve some issues although we didn't get deep in the weeds on how. However, not everyone seems to be happy from what I have been reading. It is just taking too long, there is not enough adoption and a lot of politics at play with who can benefit from Segwit not making it into the protocol.

Welcome BIP148!

BIP148 (Bitcoin Improvement Proposal #148) is a user activated soft fork (UASF) on the Bitcoin protocol that will force Segwit to happen without 95% adoption. A soft fork just means that the old protocol can still work and function but this depending on what happens, this could still cause a fork in the blockchain from what I am reading.

It seems that there is some differences in opinion between users and people with more control in the Bitcoin universe and the users said "We have had it and we want this to happen! We are pushing this ourselves on August 1st!" It looks like on August 1st we will see some changes and could end up with multiple Bitcoin blockchains or we could end up with a single better (or worse?) Bitcoin blockchain.

It is fun reading about and posting my opinion, thoughts and understanding. Which is what this is and nothing more.

I guess I should put a little disclaimer here in closing...
_{[DISCLAIMER: This is my limited understanding of a few hours of research into what is happening in the Bitcoin world. I posted what I think to create possible conversation and get feedback where I completely missed the mark. I know this is not complete and I know there are omitted details. I tried my best to cover what I could understand at the moment. There is no doubt that this is exciting times within Bitcoin and other currencies.]}