About Segwit

[Bronsted]

I have taken the initiative to read up on the scripting of the standard Bitcoin transactions but I do not really understand how beneficial segwit is to bitcoin. For one, I understand that segwit is primarily a backwards compatible increment of the block space as it strips the signature data and put it into the witness.

I am aware of the new virtual bytes or the weight units that are associated with the transactions. However, I do not understand how there are some claims that segwit also helps to make the transaction smaller. As segwit transactions includes the witness as well as the scripts that are used for regular transactions, does it make the transaction bigger than P2PKH or P2SH transactions?

If so, it is less of an optimization and more of a block size increase right?

[1714804365]

1714804365

[SquirrelJulietGarden]

Segwit help to reduce the transaction size and with smaller transaction size, you will have cheaper transaction fee.

Plot your transaction in the mempool
https://bitcoindata.science/plot-your-transaction-in-mempool.html
There are 3 transaction types for you to test it:
- P2PKH: 226 bytes
- P2SH: 247 bytes/  165 vbytes.
- Bech32: 226 bytes / 142 vbytes.
With 1 input, 2 outputs, Bech32 transaction gives you less fee: 0.00000142 BTC if you "Choose your fee per vbyte": is 1 sat/vbyte.

[Bronsted]

Segwit help to reduce the transaction size and with smaller transaction size, you will have cheaper transaction fee.

The raw size of segwit transactions isn't smaller right? The difference between a bech32 and a P2PKH is the way that the non witness portion of the script is calculated in terms of vbyte?

If it doesn't decrease the raw transaction size, this makes segwit effectively a block size increase as well right? Just one that does not need a hard fork to achieve.

[o_e_l_e_o]

The raw size of segwit transactions isn't smaller right? The difference between a bech32 and a P2PKH is the way that the non witness portion of the script is calculated in terms of vbyte?

Correct. In fact, depending on the number of inputs and outputs, the raw size of a P2WPKH (SegWit) transaction may actually be larger than an equivalent P2PKH (Legacy) transaction. The raw size of a P2SH-P2WPKH transaction (nested SegWit) will be significantly larger than an equivalent Legacy transaction. As you say, the reason SegWit transactions are cheaper is due to how the raw bytes are calculated in terms of weight units, not because they are physically smaller.

If it doesn't decrease the raw transaction size, this makes segwit effectively a block size increase as well right? Just one that does not need a hard fork to achieve.

Essentially, yes. After SegWit, the limit on block size effectively changed from 1 megabyte to 4 million weight units. The majority of blocks (when the mempool isn't empty) currently have a raw size in the region of 1.3 MB, but the largest block to date - 625861 - had a raw size of 2.4 MB.

[Bronsted]

Correct. In fact, depending on the number of inputs and outputs, the raw size of a P2WPKH (SegWit) transaction may actually be larger than an equivalent P2PKH (Legacy) transaction. The raw size of a P2SH-P2WPKH transaction (nested SegWit) will be significantly larger than an equivalent Legacy transaction. As you say, the reason SegWit transactions are cheaper is due to how the raw bytes are calculated in terms of weight units, not because they are physically smaller.

Thank you for the concise explanation!