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Dive deep into blockchain development. Is Bitcoin a Good Investment? But activation did not come easy, and it did not come fast. Bitcoin transactions consist of two main parts.
That covers which bitcoins are being moved and where they are being moved to, as well as some other data. This contains a bit of code with cryptographic signature data, which proves that the owner of a bitcoin really did want to spend the bitcoin. It’s this signature data that brings a slight complication with it. Bitcoin signatures can be slightly altered by anyone, even after these signatures are created and without invalidating the signatures.
This in turn means that the appearance of the whole transaction, and more specifically the transaction identifier, can be altered by those relaying transactions over the Bitcoin network or by miners that include transactions in blocks. Statistics from the malleability attack that hit Bitcoin in late 2015. The red lines roughly represent malleated transactions on the network. Statistics from the 2015 malleability attack on Bitcoin. This doesn’t need to be a big problem in itself. Transactions are still valid and will move the bitcoins from the same place to the same place, under all the same conditions. However, it does complicate creating newer transactions depending on unconfirmed transactions: New transactions need to know the transaction identifier they rely on.
This, in turn, makes it significantly harder to build certain second-layer protocols on top of Bitcoin, like bi-directional payment channels. IRC Bitcoin development channels — but at that time they didn’t see a tenable way of pulling it off on the Bitcoin network. Bitcoin Core contributors Peter Todd and Gregory Maxwell were having similar discussions on IRC. But now, the two were making progress with their ideas to counter malleability. Maxwell and, this time, well-known cryptographer Dr. Adam Back were discussing the malleability issue on IRC once again. Now, Back suggested computing the transaction ID by omitting the signature.
Adam Back and Gregory Maxwell, as well as entrepreneur and investor Austin Hill and several Bitcoin Core developers, including Dr. The company was set to focus on sidechains: alternative blockchains that can effectively be pegged to Bitcoin. This feature would conclusively solve the malleability issue on the sidechain — by separating base transaction data from witness data into different data structures. 2015: the block size limit dispute. Mike Hearn, in particular, believed that Bitcoin’s 1 megabyte block size limit should be increased with a hard fork, an incompatible protocol change that would require almost the entire Bitcoin ecosystem to upgrade. No easy task — even more so because there was no community-wide consensus for this change. The controversial nature of the effort put the Bitcoin development community and industry in somewhat of a state of emergency.
Joseph Poon and Thaddeus Dryja only months earlier. The only problem: this solution would require a malleability fix. At this point in time, developers were still not sure if and how the malleability bug could be fixed. Most still thought Segregated Witness could not be implemented on Bitcoin’s main chain without a hard fork.
And even Dashjr didn’t seem to realize the implications of this possibility at first. Bitcoin block: the coinbase transaction that rewards miners new coins. By creating a new part of a Bitcoin block for the witness data, Bitcoin’s block size could be increased in such a way that non-upgraded nodes wouldn’t notice. This could actually increase Bitcoin’s block size without increasing Bitcoin’s existing block size limit. Mere weeks before the second Scaling Bitcoin workshop, several Bitcoin Core contributors thought they may finally have found at least a temporary solution for the block size limit dispute. Segregated Witness would effectively increase the limit in a backward-compatible manner, while at the same time fixing the long-standing malleability bug, thereby enabling more advanced scaling solutions like the lightning network.
A win-win-win solution — or so they thought. Scaling Bitcoin workshops in Hong Kong. Many first heard about the proposal there, and it initially seemed to be welcomed with enthusiasm. Bitcoin Core development team, as well as other developers and users in the broader Bitcoin ecosystem. But despite initial excitement, Segregated Witness had its critics, too. Most of these issues were deemed either solvable, unconvincing or worth the trade-off by the Bitcoin Core development team at large, however.