SegWit, short for Segregated Witness, is an upgrade to the Bitcoin protocol enabled through a soft fork of the original blockchain. The SegWit scaling solution tackles Bitcoin's scalability issues by changing how data is stored on the Bitcoin blockchain.
SegWit removes signature or witness information and stores it outside the base transaction block. This proved a massive bonus for Bitcoin, which has a block size of only 1MB.
While SegWit doesn't change the block size limit, it allows each block to handle more transactions, improving the efficiency of the overall network. Meanwhile, it leverages a block weight capped at 4MB, which includes the segregated witness data.
The segregated witness consensus layer was activated on the Litecoin network in May 2017, while Bitcoin adopted it two months later, in August 2017. In addition, SegWit also supports Layer-2 protocols on the Bitcoin blockchain, such as Lightning Network.
