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Segregated Witness Soft Fork – Litecoin Forking

Segregated Witness Soft Fork – Litecoin Forking

Segregated Witness, or SegWit is an update to the Bitcoin protocol which is designed to fix the transaction malleability issue, ensures transactions take less space per block, and to enable Bi Directional payment channels such as the Lightning network to run on top of Bitcoin.

It seems that the Bitcoin mining community is struggling to come to a consensus where forking Bitcoin is concerned. Segwit is a soft fork, and therefore does not require all nodes to update.

Segwit has many advantages over many other proposed solutions to the scaling issue, in particular the use of Bi Directional payment channels. Bitcoin can currently on average process 7 transactions per second with a 1MB block. Many hard forks propose a one time increase or unlimited blocks.

The visa payment processing network can handle more than 24,000 transactions every second. Even 1000 x 7 (1000MB blocks) will only reach 7000 transactions every second, and this is with 1GB blocks (every 10 minutes). With transaction pruning, etc this could be reduced, but still in it’s current form it will not rival the traditional payment networks and a simple increase of the block size will not do it, far from it as you can see by the figures above.

Segregated witness allows the blockchain to act as the base payment layer with solutions such as the lightning network on top which can move coins around off chain, and can push them to the chain if needed (for example, to mediate a dispute). Transactions also take up less space per block. Older clients can still send transactions in the usual way which will be recognized by the segwit nodes.

As the Bitcoin community argues and while Bitcoin blocks still stand at 1MB (which risks the mempool overflowing with unprocessed transactions) and trying to either stick with the ‘traditional’ 1MB blocks or some other solution is severely misguided at this point due to the above mentions.

With Litecoin deploying Segregated Witness and with the miners likely to agree to the change, Litecoin will solve the scaling solution long before Bitcoin does, as if Bitcoin does not follow in the footsteps it is unlikely ever to reach consensus on any other fix, either. It could become that Bitcoin is the digital gold and Litecoin is the silver used for day-to-day transactions.

Time will tell. It is likely Litecoin will implement the fork soon, we will update as more information becomes available on the subject.

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