Segregated Witness (SegWit)

A Segregated Witness or simply, a SegWit is a Bitcoin Improvement Proposal (BIP) that is geared toward fixing the malleability of transactions done on Bitcoin. It is a process in which the increase of a block size limit on a blockchain becomes possible upon the removal of the signature data from Bitcoin transactions.

When certain facets of a transaction are taken out, space or capacity is freed up, leaving more for transactions to the chain. 

Before, upon the change of the “witness” data (also known as signatures) on blocks, the transaction ID would effectively be changed along with the subsequent hash. What SegWit aims at doing is fix the scheme by segregating the signature and he block content. The apparent side effect of this alteration to the system is the smaller block sizes and the permission of supporting second layer solutions.