Segwit stands for "‍segregated witness," a technique for reducing bitcoin transaction fees. Segwit moves all of the signature data in a bitcoin block to the end, combining all of the transactions' signatures into one. As a result, more transactions can be stored in the same amount of space while still maintaining the security of the bitcoin blockchain. When there are more transactions per block, the transaction cost per transaction is lower compared to legacy transactions.

A SegWit (Segregated Witness) address is a type of Bitcoin address that incorporates a protocol upgrade designed to improve the Bitcoin network's scalability, efficiency, and security. Introduced in 2017 via the SegWit upgrade, it separates transaction signature data from the transaction data itself, reducing the transaction's overall size. This separation allows more transactions to fit into each block, lowering transaction fees and speeding up processing times. SegWit addresses start with bc1 for native SegWit (bech32 format) or 3 for P2SH (Pay-to-Script-Hash) SegWit compatibility. Using SegWit addresses can enhance network efficiency and offers additional protection against transaction malleability a security vulnerability. As a result, they are increasingly popular among users and exchanges for Bitcoin transactions.