SegWit Adoption

In the previous post I touched upon SegWit and how it was used to fit almost 4MB of data within the 1MB block size limit present in Bitcoin.

SegWit was introduced to the Bitcoin network in 2017 and removed (segregated) the witness data from the transactions’ inputs and moved them to a separate structure within the blockchain. This had the effect of reducing the block size requirements for transactions (and therefore the often the transaction costs) and protecting against transaction malleability.

The move also brought in a means to increase the storage potential as seen in the previous post relating to ordinals of around 3.9MB being stored on chain. This is due to a move from bytes to Work Units (wu) for calculating the size. Since the SegWit update, blocks are limited to 4 million weight units, with 1 byte in a legacy transaction being 4wu, but 1 byte in a SegWit transaction being 1wu.

Native SegWit addresses can be identified as starting bc1 on the mainnet, or tb1 for the test net. P2SH (Pay to Script Hash) addresses can also be used for SegWit transactions which start with ‘3’.

The adoption of SegWit for transactions appears pretty rapid, perhaps not unexpected given the savings made in fees by users. In 2018, approximately 1/3rd of transactions used SegWit. By 2019 this was around 43% and by 2022 approximately 87% of transactions used SegWit. Impressively, in 2023 SegWit usage appears to continue to rise with 86.5% of transactions using SegWit.

The table below summarises the quantity and percentage of SegWit transactions each year.