SegWit is one of bitcoins solutions to it’s scale-ability issues, as it still remains 1MB per block, the new protocol would separated the transaction signature in order to fit more transactions onto each block. SegWit introduces a new transaction format where witness data is counted as just 1 unit and core data is counted as 4. This format essentially increases the block size to 4MB by counting the witness data as only 0.25 bytes. The change is only for the witness data as all core data is still counted as 1 byte. A good analogy for this would be keeping a check from a bank after you cashed it, yes, it could be seen as record keeping but isn’t necessary and takes up valuable space in your files.
The increased popularity of Bitcoin means that getting your transactions confirmed could take hours or in some cases, days. SegWit is a step in the right direction in terms of scale-ability. Allowing more transactions per block and the future implementation of “The Lightning Network” which could help create more immediate transactions for use with a greater variety of vendors. The Lightning Network is like going to a bar and starting a tab, you put a hold for X amount of bitcoins when you begin your night, assuring the bar gets paid, and you get back whatever isn’t spent out of that hold.
SegWit is a soft fork in the bitcoin blockchain, only taking effect once the network reaches 95% miner approval. Recently, bitcoin hard forked and bitcoin cash was created due, partly in fact, to the implementation of the SegWit protocol. Those behind BCH believe the path to scale-ability is dependent on the size of the blocks with theirs being 8MB oppose to the traditional 1MB and eliminating SegWit and the use of the lightning network.
As with any change to technology it isn’t without it’s risks. These risks would include bugs, resulting in unexpected results, user error, generally caused by confusion with the new system, or even ecosystem interactions, code in the system that may not be compatible with the change.
Some do not believe that just SegWit implementation is enough for bitcoins scale-ability. With a SegWit2x hard fork planned to happen by the end of this year. The hark fork would still have the SegWit protocol but with a block limit of 2MB instead of 1MB. While this hasn’t gained quite as much support as the SegWit soft fork, it will be interesting to see how this plays out and which ones miners rally behind.
So is SegWit good or bad for the long term, we are sure to find out in the coming months.