Why This Post?
When I first built my Bitcoin CLI wallet in Rust, it worked โ but it was stuck in the past.
It only supported legacy addresses (1...
), which meant:
- Higher fees ๐ธ
- Slower confirmations ๐ข
- No Lightning Network โก support
Then I integrated SegWit (Segregated Witness), and everything changed:
transactions got 35% cheaper, more secure, and finally ready for the Lightning era.
In this post, Iโll break down:
- What SegWit really does (without the fluff)
- How I implemented it in Rust step-by-step
- Real-world results (performance, fees, and UX)
- What this unlocks next (Lightning, Taproot, and beyond)
If youโre building wallets, apps, or just curious about Bitcoin internals, this is your practical roadmap to SegWit.
๐งฉ SegWit in 60 Seconds
SegWit is a Bitcoin upgrade (2017) that separates witness data (signatures) from the main transaction.
Why it matters:
- Fixes transaction malleability (critical for Lightning + smart contracts)
- Makes transactions smaller & cheaper (up to 35% fee savings)
- Expands block capacity without hard forks
Think of it like moving signatures into a side folder: the transaction stays valid, but the โheavyโ parts donโt clog up the main block.
โ๏ธ Legacy vs SegWit: What Changes?
Feature | Legacy (P2PKH) | SegWit (P2WPKH) |
---|---|---|
Address format | 1... |
bc1... |
Signature placement | In scriptSig | In witness data |
Bytes per input | ~148 | ~68 (vbytes) |
Transaction malleable? | โ Yes | โ No |
Fees | Higher | ~35% lower |
Thatโs the practical win: less bytes = less fees = happier users.
๐ Implementing SegWit in Rust
1. Address Generation
// Legacy
let legacy = Address::p2pkh(&compressed, Network::Testnet);
// SegWit (bech32)
let segwit = Address::p2wpkh(&compressed, Network::Testnet);
๐ Key step: add bech32 encoding and witness program support.
2. Transaction Signing
// Legacy signing
let sighash = cache.legacy_signature_hash(
input_index,
&script_pubkey,
EcdsaSighashType::All as u32,
)?;
// SegWit signing
let sighash = cache.p2wpkh_signature_hash(
input_index,
&script_code,
Amount::from_sat(utxo.value),
EcdsaSighashType::All,
)?;
โก Difference: SegWit stores signatures in witness data, not in the main script.
3. Fee Calculation with vBytes
let num_p2wpkh_inputs = selected_utxos.iter()
.filter(|(addr, _)| addr.address.starts_with("tb1q"))
.count() as u64;
let num_p2pkh_inputs = selected_utxos.len() as u64 - num_p2wpkh_inputs;
let estimated_size = num_p2pkh_inputs * 148 + num_p2wpkh_inputs * 68 +
dest_out_sz + change_out_sz + 10;
SegWit inputs get a 75% discount in size โ lower fees.
๐ฏ Real-World Results
After adding SegWit:
- Transactions shrank from ~250 bytes โ ~180 vbytes
- Users paid 35% less in fees
- Transactions confirmed faster (blocks fit more txs)
- Wallet code became cleaner + ready for Lightning
This wasnโt just an optimization โ it was a gateway to future Bitcoin features.
โก Whatโs Next?
SegWit laid the groundwork. Next stops:
- Lightning Network integration
- Taproot support (more privacy + efficiency)
- Advanced scripts and multi-sig flows
๐ Resources
- BIP 141: Segregated Witness
- BIP 173: Bech32 Addresses
- Bitcoin Core Docs
- My Wallet Implementation (GitHub)
๐ If youโre building in Bitcoin, add SegWit today. Itโs not optional anymore โ itโs the bridge to the future of Bitcoin.
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