A major change or improvement, depending on who you speak in the altcoin community has been activated on Litecoin.
So what exactly is SegWit and why is it important?
We attempt to answer some of the questions.
What is SegWit?
Think of SegWit as a major software update to Litecoin.
It was initially designed for Bitcoin, however, due to problems getting the Bitcoin core behind this change, those plans had to be shelved. Litecoin, which is basically a straight fork of Bitcoin but with a different mining algorithm, was perfect for adapting this solution.
What Are The Benefits of SegWit?
This is an upgrade to the Litecoin network that is designed to make the currency more immune to transaction malleability. This is a kind of attack on the system where the unique ID used for confirmation of transactions on the network can be changed before the confirmation actually takes place and then used to make double transactions or withdrawals.
Through the use of SegWit, Litecoin is attempting to separate the transaction data from the witness data, thus making transaction malleability almost impossible.
Segwit Isn’t Just One Improvement
Apart from making transaction more secure though SegWit will also allow the implementation of a number of other improvements such as reducing the time required for transactions to go through, solve the quadratic hashing problem and improve capacity.
The Lightning Network, first envisioned to expand bitcoin, is being tested on Litecoin and even though not too many people are sure that it is actually required on this network, it still serves as an important technological leap.
The most important benefit of rolling out SegWit is perhaps the fact that major Bitcoin developers have announced their intention to roll out support for Litecoin and even port their projects. The .NET Bitcoin library NBitcoin and the wallet mSigna are among such ports that are being put in place.
Litecoin could also become the altcoin where most technological innovations and advancements are rolled out first. Developers have been working on confidential transaction, TumbleBit and Schnorr signatures for bitcoin, which are now almost certainly going to be ported over to Litecoin and tested out here first.
Why Did Litecoin Implement SegWit?
Apart from the obvious technical improvements SegWit confers, Litecoin will also benefit from the publicity it will get by being the first major cryptocurrency from implementing this advancement.
The value of Litecoin has surged by almost 10 times as the news of the impending SegWit adoption started to break and there is a likelihood of further gains in the short term.
Implementation Is Easy?
Of course implementing SegWit was not very easy for Litecoin.
The inventer of Litecoin, Charlie Lee, was keen that this soft fork should have been activated last year but there were a lot of apprehensions in the miner community. It was only after the Global Litcoin Roundtable meeting where the biggest stakeholders in the currency got together that some sort of consensus on activation of this fork emerged.
So is everyone happy with Litecoin activating SegWit?
Not quite. There is a large section of the miner community that is not happy with this being rolled out as a soft fork.
What this means is that even people who do not choose to update their software will be able to continue using Litecoin. It sounds like a good thing at first and smaller changes are often desirable to be rolled out as a soft fork since it prevents sections of the community being locked out.
In this case though, SegWit is huge change and ideally should have been rolled out as a hard fork. Litecoin uses an extension block to put in place the soft fork which blocks out a lot of important information from older wallets.
Wallets that are using the older software will no longer be able to understand when it is being sent money or be able to spend it. This will put users at risk, something that is currently being ignored in the hype surrounding SegWit.
All in all, SegWit solves some very important problems but is maybe not the best engineered solution. It seems like a compromise, one that was maybe necessary, and will need to be evaluated closely over the next few months.
Written by: dhruvgupta