Segregated Witness Enters Final Testnet Stage, Includes Lightning Network Support

Bitcoin Core developers Dr. Pieter Wuille, Eric Lombrozo and Johnson Lau launched a fourth – and probably final – iteration of the Segregated Witness testnet today. Perhaps most importantly compared to previous versions, ‘SegNet 4′ includes support for another upcoming Bitcoin protocol improvement, CheckSequenceVerify (CSV). This allows for experimentation with routable bidirectional payment channels, better known as lightning networks.
Segregated Witness is the nifty technical innovation that allows senders of Bitcoin transactions to move cryptographic signatures from typical blocks to separate structures. This is set to improve the Bitcoin protocol in several ways, including a long-awaited fix of transaction malleability. And, very relevant in light of the ongoing scaling debate, Segregated Witness will offer up to 1 megabyte of additional block space, depending on the types of transactions.
Compared to earlier SegNets, SegNet 4 includes CSV support. CSV allows users to make bitcoins unspendable for a period of time, much like CheckLockTimeVerify (CLTV), but with a relative timelock. Whereas CLTV locks bitcoins up until a specific time in the future, CSV locks bitcoins up for a specific amount of time after a CSV transaction is included in a block. This enables more sophisticated smart contracts, as it allows for greater flexibility.
Speaking to Bitcoin Magazine, Bitcoin Core developer and Ciphrex CEO Eric Lombrozo explained that the combination of Segregated Witness and CSV particularly benefits added scaling layers on top of the Bitcoin blockchain.

This post was published at Bitcoin Magazine on March 31st, 2016.