Currently the block size limit is 1 MB. I keep seeing people saying SegWit increases the block size to 3.7 MB. How does this work exactly?
Does it reduce the transactions size making it fit the same number in 1 MB as it would take normal transactions to fit in 3.7 MB?
Or does it actually increase the block size limit?
If it's #1, wouldn't it require 100% of transactions to be SegWit to have comparable 3.7 MB blocks? If only 10% of the transactions are SegWit then the comparable block size limit would only increase my 0.1 MB, correct?