Different types of Bitcoin wallets: Legacy vs Segwit wallets
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Different types of Bitcoin wallets: Legacy vs Segwit wallets


Why was SegWit implemented?

As you know after reading this article, Bitcoin network works by taking transaction requests from everyone, stacking them into so-called "blocks", sealing those and making them public. Since the process of sealing blocks takes time and resources, the more transactions you can process at one time, the better.

Unfortunately, Bitcoin blocks are designed to weigh 1 MB, which isn't really much. Because of that BTC network is able to process 7 transactions per second, which is a tiny amount when compared to the number of BTC users.

If there are too many requests on the blockchain it reacts in the simplest possible way - increases fees so some of the customers will cancel their transactions. However, since nobody likes to pay more for the same thing, a better solution had to be invented.

In 2017 Bitcoin got an update and a new kind of wallet has been made. It is called SegWit (Segregated Witness) and it solves the problem in a pretty neat way

What is the SegWit wallet and how does it work?

Well, the mechanism is simple: if the block space is so valuable, let's put only transaction data in it, without signatures. Those will be in a separate piece of data and that's where the name of the wallet comes from.

Is the SegWit wallet better than legacy? What's the difference?

Since there is fewer data in a block, we can put more transactions in it, making blockchain capable of processing more money transfers. This also reduces load, so it costs less to send your funds somewhere. Since SegWit is backward compatible, you can send funds to both old and new wallets from it.

Is SegWit popular?

In late 2018 SegWit-spending Bitcoin payments reached almost 50% and has been oscillating between around 40 to 50% for a year. A the beginning of 2020 it has reached a stable 60% but a lot of users still use old kinds of wallets.

Can I use SegWit on Crypto Voucher?

The short answer is, yes!

The long answer is yes except the Bech32 Segwit wallets. Because only 1% of the market is stored in this standard, not all of the crypto companies ( including Crypto voucher ) implemented it. That’s the reason why, at this moment, you cannot redeem vouchers to a Bech32 SegWit type.

Is my wallet a SegWit type?

It's simple: look at the beginning of your wallet number. If it starts with:

  • 1 - that's old kind of Bitcoin wallet, usually called "Legacy"

  • 3 - that's SegWit one

  • bc1 - it's "Native SegWit", bech32 mentioned before. That's the latest version on SegWit wallet, reducing blockchain load even more

How do I make a SegWit wallet?

Creating a SegWit wallet is no different than a legacy one.

To get one of them, simply find a company offering the type of wallet you want to use (like web ones), check if they support SegWit and here you go!

Is SegWit the same as Bitcoin Lightning?

No, Bitcoin Lightning is a completely different thing. You can read about it here.