Abstract
Bitcoin has a scalability problem: the limited size of its blocks means that transactions may have to wait to be added to the blockchain. This congestion leads to long transmission times between the mempool and the blockchain, as well as high transaction fees. One solution to this issue is the Segregated Witness (SegWit) upgrade in August 2017 which reduces the size of transactions, thereby allowing more to be processed in each block. This paper examines the impact of the SegWit upgrade on the Bitcoin blockchain. We discover increasing use of SegWit transactions by users over time, suggesting the successful adoption of SegWit. We also show that SegWit transactions are added to the block more quickly and with a smaller fee than non-SegWit transactions, even after accounting for the size of the transaction. We discuss some possible explanations for this puzzle and offer avenues for future research.