Segregated Witness (SegWit)

Segregated Witness is a significant protocol upgrade for Bitcoin, implemented in 2017. It separates digital signatures from transaction data, effectively increasing the block size limit. This separation allows more transactions to fit into each block, improving scalability. By altering the way transaction data is stored, SegWit also prevents transaction malleability, a flaw that allowed transaction IDs to be altered. This enhancement facilitates smoother operations for second-layer solutions like the Lightning Network. Overall, SegWit improves network efficiency, reduces fees, and enhances security, making it a crucial development in the evolution of Bitcoin.