Segwit stands for Segregated Witness. In short, Segwit separates the transaction signatures so that the transaction uses less data on the Bitcoin network.

By default, new Edge accounts created use a Bitcoin Segwit wallet. Users coming from Airbitz that log into Edge will be using a non-Segwit Bitcoin wallet. When creating a new wallet inside Edge, users will be given the option to create a bitcoin wallet that either uses or does not use Segwit.

A part from the potential savings in transaction fees by less data being used on the network, the next noticeable difference between Segwit and non-Segwit are the address formats. Segwit addresses begin with the prefix 3 and non-Segwit addresses begin with a 1. Non-Segwit addresses are also known as Legacy addresses.

Bitcoin can still be transferred between both types of wallets, meaning that someone with bitcoin on a Segwit wallet would be able to send into a non-Segwit wallet, and vice versa. The Segwit implementation is a soft fork, meaning it is backwards compatible so that any transactions between the two different wallets or address formats will be able to interact with each other, since they are still on the same Bitcoin blockchain.

We recommend that users use a Segwit Bitcoin wallet as that will essentially save them more on transaction fees than a non-Segwit wallet will. However, for the power user we still wanted to give them the option to create and use a wallet that they see as the best implementation.