• CN

Segwit with LN

Lightning Network uses payment channels with Hashed TimeLock Contracts. Both of those things are currently usable on Bitcoin mainnet without segwit, so LN is possible without segwit.

However, without segwit or another malleability fix, LN channels have to deal with situations where transactions get mutated ("malleated"), which makes them get stuck at various steps. Preventing them from getting stuck permanently requires either introducing trust (which we don't want to do) or setting some annoying timeouts that limit the efficiency of channels.

LN can also take advantage of many of segwits other benefits such as:

  • Increased security for multisig: every segwit transaction uses multisig, and because it's a new protocol, it can trivially make use of the new segwit output format that allows using this feature.
  • Script versioning: can be used to add new features to Bitcoin more easily than they can be added without segwit (some features being made more easy to add than others). Two features currently being researched are MAST and signature aggretation---both of which can provide modest increases to the capacity of the network and which can help improve transaction privacy.
  • More block space: meaning more channels can be opened or closed in any particular block.
  • Better cost accounting for transactions: related to the above, this provides benefits to people who produce transactions that reduce the short-term and long-term load on full nodes. Lightning-style transactions are effective at doing this, so they benefit from this segwit feature.

Also, fixing malleability for upgraded software makes designing LN-compatible (and any Bitcoin-compatible) wallets much easier in general, so that's a huge plus too.

Segwit with RSK