Blockchain 101 – Bitcoin Upgrades After learning how wallets and keys work and how mining keeps the network secure, it’s time to see how Bitcoin has upgraded itself to become faster, safer, and more scalable. The most important upgrades in Bitcoin’s history were SegWit (2017) and Taproot (2021). SegWit – Segregated Witness Before SegWit, when blocks were full, users had to pay higher fees for their transactions to be confirmed faster. This made the network crowded and expensive. 👉 For example, in 2017 the Bitcoin network was extremely congested. Some transactions had fees up to $30, even when the transfer amount was less than $5! After SegWit, by separating signature data, the effective block size increased to about 2 MB. That means if a block used to fit ~2,000 transactions, after SegWit it could fit ~4,000. This directly cut transaction fees nearly in half. Imagine a bus where passengers and luggage are all mixed together, leaving little room. SegWit said: “Put the luggage in the cargo hold” → now the bus has space for more passengers, without changing its size. Main benefits: More transactions per block → Higher scalability Lower fees Fix for Transaction Malleability → which enabled the development of the Lightning Network Forks in Bitcoin Not everyone agreed with SegWit. Some miners and developers argued: “Instead of separating signatures, let’s just make the block bigger so everyone fits more easily.” That’s when the first forks happened. A fork in blockchain means a split into two different paths, usually when parts of the community disagree on the rules. Two main types: Hard Fork: New rules are incompatible with old ones → the blockchain splits into two. Bitcoin Cash ( $BCH ) and Bitcoin Gold ( $BTG ). Soft Fork: New rules are still compatible with old ones. SegWit itself was a soft fork since old nodes still accepted blocks, they just didn’t use the full capacity. 👉 Bitcoin Cash (BCH): In 2017, some increased block size from 1 MB to 8 MB. That allowed many more transactions per block, but running a full node became harder due to larger chain size and higher hardware requirements. 👉 Bitcoin Gold (BTG): Others said the issue wasn’t block size, but ASIC miners dominating the network. So they switched from SHA-256 to Equihash, making mining possible with GPUs again. In practice, BTG never gained major traction, but its message was clear: the community values decentralization. 💡 Bus analogy: SegWit → “manage the space better” Bitcoin Cash → “make the bus bigger” Bitcoin Gold → “change the bus fuel so more drivers can participate” Taproot – Privacy and Flexibility (2021) The next major upgrade was Taproot in 2021. Before Taproot, simple and complex transactions (like multisig or conditional contracts) looked different on-chain. This hurt privacy and made complex transactions more expensive. 👉 A startup wants to secure funds so that 3 out of 5 managers must sign to spend. Before Taproot, the blockchain showed: “This is a multisig transaction with 3 signatures.” And the fee was high. After Taproot, the exact same transaction looks just like a normal one, with a fee similar to a simple transfer. Tech behind it: Schnorr Signatures: Multiple signatures can be combined into one. Transaction unification: Simple and complex transactions look the same → more privacy. Preparation for smart contracts and Layer-2 apps on Bitcoin. Previously, when 3 people bought a house, all names had to be listed on the contract. With Taproot, there’s just one combined signature, so outsiders don’t know how many people were involved. Layer-2 – Lightning Network Even with SegWit, Bitcoin was still relatively slow and costly for small payments. That’s where Layer-2 solutions like Lightning Network came in – enabling near-instant, low-cost transactions. 👉 Imagine you want to buy coffee every day. If each payment goes on the main chain, fees and delays add up. With Lightning, you open a channel with the coffee shop, transact inside it, and only the final balance is recorded on the blockchain. 💡 Instead of going to the bank for every loaf of bread, you keep a running tab with the baker and settle only once at the end of the month. In summary SegWit (2017): Increased block capacity, lowered fees, fixed transaction malleability, and enabled Lightning Network. Taproot (2021): More privacy, cheaper complex transactions, and support for smart contracts. Bitcoin Cash / Bitcoin Gold: Forks showing community disagreements and different visions for Bitcoin’s future. Lightning Network: The key Layer-2 solution making fast, cheap, everyday payments possible. These upgrades weren’t just technical tweaks they shaped the path for Bitcoin’s scalability and long-term future.
