Merge #8393: Support for compact blocks together with segwit

27acfc1 [qa] Update p2p-compactblocks.py for compactblocks v2 (Suhas Daftuar)
422fac6 [qa] Add support for compactblocks v2 to mininode (Suhas Daftuar)
f5b9b8f [qa] Fix bug in mininode witness deserialization (Suhas Daftuar)
6aa28ab Use cmpctblock type 2 for segwit-enabled transfer (Pieter Wuille)
be7555f Fix overly-prescriptive p2p-segwit test for new fetch logic (Matt Corallo)
06128da Make GetFetchFlags always request witness objects from witness peers (Matt Corallo)

9 files changed, 489 insertions, 241 deletions

diff --git a/qa/rpc-tests/p2p-compactblocks.py b/qa/rpc-tests/p2p-compactblocks.py
index ac4655a841..d91e10d77c 100755
--- a/qa/rpc-tests/p2p-compactblocks.py
+++ b/qa/rpc-tests/p2p-compactblocks.py
@@ -12,14 +12,16 @@ from test_framework.script import CScript, OP_TRUE
 
 '''
 CompactBlocksTest -- test compact blocks (BIP 152)
-'''
 
+Version 1 compact blocks are pre-segwit (txids)
+Version 2 compact blocks are post-segwit (wtxids)
+'''
 
 # TestNode: A peer we use to send messages to bitcoind, and store responses.
 class TestNode(SingleNodeConnCB):
     def __init__(self):
         SingleNodeConnCB.__init__(self)
-        self.last_sendcmpct = None
+        self.last_sendcmpct = []
         self.last_headers = None
         self.last_inv = None
         self.last_cmpctblock = None
@@ -30,7 +32,7 @@ class TestNode(SingleNodeConnCB):
         self.last_blocktxn = None
 
     def on_sendcmpct(self, conn, message):
-        self.last_sendcmpct = message
+        self.last_sendcmpct.append(message)
 
     def on_block(self, conn, message):
         self.last_block = message
@@ -90,29 +92,31 @@ class CompactBlocksTest(BitcoinTestFramework):
     def __init__(self):
         super().__init__()
         self.setup_clean_chain = True
-        self.num_nodes = 1
+        # Node0 = pre-segwit, node1 = segwit-aware
+        self.num_nodes = 2
         self.utxos = []
 
     def setup_network(self):
         self.nodes = []
 
-        # Turn off segwit in this test, as compact blocks don't currently work
-        # with segwit.  (After BIP 152 is updated to support segwit, we can
-        # test behavior with and without segwit enabled by adding a second node
-        # to the test.)
-        self.nodes = start_nodes(self.num_nodes, self.options.tmpdir, [["-debug", "-logtimemicros=1", "-bip9params=segwit:0:0"]])
+        # Start up node0 to be a version 1, pre-segwit node.
+        self.nodes = start_nodes(self.num_nodes, self.options.tmpdir, 
+                [["-debug", "-logtimemicros=1", "-bip9params=segwit:0:0"], 
+                 ["-debug", "-logtimemicros", "-txindex"]])
+        connect_nodes(self.nodes[0], 1)
 
-    def build_block_on_tip(self):
-        height = self.nodes[0].getblockcount()
-        tip = self.nodes[0].getbestblockhash()
-        mtp = self.nodes[0].getblockheader(tip)['mediantime']
+    def build_block_on_tip(self, node):
+        height = node.getblockcount()
+        tip = node.getbestblockhash()
+        mtp = node.getblockheader(tip)['mediantime']
         block = create_block(int(tip, 16), create_coinbase(height + 1), mtp + 1)
         block.solve()
         return block
 
     # Create 10 more anyone-can-spend utxo's for testing.
     def make_utxos(self):
-        block = self.build_block_on_tip()
+        # Doesn't matter which node we use, just use node0.
+        block = self.build_block_on_tip(self.nodes[0])
         self.test_node.send_and_ping(msg_block(block))
         assert(int(self.nodes[0].getbestblockhash(), 16) == block.sha256)
         self.nodes[0].generate(100)
@@ -125,7 +129,7 @@ class CompactBlocksTest(BitcoinTestFramework):
             tx.vout.append(CTxOut(out_value, CScript([OP_TRUE])))
         tx.rehash()
 
-        block2 = self.build_block_on_tip()
+        block2 = self.build_block_on_tip(self.nodes[0])
         block2.vtx.append(tx)
         block2.hashMerkleRoot = block2.calc_merkle_root()
         block2.solve()
@@ -134,26 +138,30 @@ class CompactBlocksTest(BitcoinTestFramework):
         self.utxos.extend([[tx.sha256, i, out_value] for i in range(10)])
         return
 
-    # Test "sendcmpct":
-    # - No compact block announcements or getdata(MSG_CMPCT_BLOCK) unless
-    #   sendcmpct is sent.
-    # - If sendcmpct is sent with version > 1, the message is ignored.
+    # Test "sendcmpct" (between peers preferring the same version):
+    # - No compact block announcements unless sendcmpct is sent.
+    # - If sendcmpct is sent with version > preferred_version, the message is ignored.
     # - If sendcmpct is sent with boolean 0, then block announcements are not
     #   made with compact blocks.
     # - If sendcmpct is then sent with boolean 1, then new block announcements
     #   are made with compact blocks.
-    def test_sendcmpct(self):
-        print("Testing SENDCMPCT p2p message... ")
-
-        # Make sure we get a version 0 SENDCMPCT message from our peer
+    # If old_node is passed in, request compact blocks with version=preferred-1
+    # and verify that it receives block announcements via compact block.
+    def test_sendcmpct(self, node, test_node, preferred_version, old_node=None):
+        # Make sure we get a SENDCMPCT message from our peer
         def received_sendcmpct():
-            return (self.test_node.last_sendcmpct is not None)
+            return (len(test_node.last_sendcmpct) > 0)
         got_message = wait_until(received_sendcmpct, timeout=30)
         assert(received_sendcmpct())
         assert(got_message)
-        assert_equal(self.test_node.last_sendcmpct.version, 1)
+        with mininode_lock:
+            # Check that the first version received is the preferred one
+            assert_equal(test_node.last_sendcmpct[0].version, preferred_version)
+            # And that we receive versions down to 1.
+            assert_equal(test_node.last_sendcmpct[-1].version, 1)
+            test_node.last_sendcmpct = []
 
-        tip = int(self.nodes[0].getbestblockhash(), 16)
+        tip = int(node.getbestblockhash(), 16)
 
         def check_announcement_of_new_block(node, peer, predicate):
             peer.clear_block_announcement()
@@ -165,56 +173,75 @@ class CompactBlocksTest(BitcoinTestFramework):
                 assert(predicate(peer))
 
         # We shouldn't get any block announcements via cmpctblock yet.
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is None)
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is None)
 
         # Try one more time, this time after requesting headers.
-        self.test_node.request_headers_and_sync(locator=[tip])
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is None and p.last_inv is not None)
+        test_node.request_headers_and_sync(locator=[tip])
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is None and p.last_inv is not None)
 
         # Test a few ways of using sendcmpct that should NOT
         # result in compact block announcements.
         # Before each test, sync the headers chain.
-        self.test_node.request_headers_and_sync(locator=[tip])
+        test_node.request_headers_and_sync(locator=[tip])
 
         # Now try a SENDCMPCT message with too-high version
         sendcmpct = msg_sendcmpct()
-        sendcmpct.version = 2
-        self.test_node.send_and_ping(sendcmpct)
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is None)
+        sendcmpct.version = preferred_version+1
+        sendcmpct.announce = True
+        test_node.send_and_ping(sendcmpct)
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is None)
 
         # Headers sync before next test.
-        self.test_node.request_headers_and_sync(locator=[tip])
+        test_node.request_headers_and_sync(locator=[tip])
 
         # Now try a SENDCMPCT message with valid version, but announce=False
-        self.test_node.send_and_ping(msg_sendcmpct())
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is None)
+        sendcmpct.version = preferred_version
+        sendcmpct.announce = False
+        test_node.send_and_ping(sendcmpct)
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is None)
 
         # Headers sync before next test.
-        self.test_node.request_headers_and_sync(locator=[tip])
+        test_node.request_headers_and_sync(locator=[tip])
 
         # Finally, try a SENDCMPCT message with announce=True
-        sendcmpct.version = 1
+        sendcmpct.version = preferred_version
         sendcmpct.announce = True
-        self.test_node.send_and_ping(sendcmpct)
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is not None)
+        test_node.send_and_ping(sendcmpct)
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is not None)
 
         # Try one more time (no headers sync should be needed!)
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is not None)
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is not None)
 
         # Try one more time, after turning on sendheaders
-        self.test_node.send_and_ping(msg_sendheaders())
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is not None)
+        test_node.send_and_ping(msg_sendheaders())
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is not None)
+
+        # Try one more time, after sending a version-1, announce=false message.
+        sendcmpct.version = preferred_version-1
+        sendcmpct.announce = False
+        test_node.send_and_ping(sendcmpct)
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is not None)
 
         # Now turn off announcements
+        sendcmpct.version = preferred_version
         sendcmpct.announce = False
-        self.test_node.send_and_ping(sendcmpct)
-        check_announcement_of_new_block(self.nodes[0], self.test_node, lambda p: p.last_cmpctblock is None and p.last_headers is not None)
+        test_node.send_and_ping(sendcmpct)
+        check_announcement_of_new_block(node, test_node, lambda p: p.last_cmpctblock is None and p.last_headers is not None)
+
+        if old_node is not None:
+            # Verify that a peer using an older protocol version can receive
+            # announcements from this node.
+            sendcmpct.version = preferred_version-1
+            sendcmpct.announce = True
+            old_node.send_and_ping(sendcmpct)
+            # Header sync
+            old_node.request_headers_and_sync(locator=[tip])
+            check_announcement_of_new_block(node, old_node, lambda p: p.last_cmpctblock is not None)
 
     # This test actually causes bitcoind to (reasonably!) disconnect us, so do this last.
     def test_invalid_cmpctblock_message(self):
-        print("Testing invalid index in cmpctblock message...")
         self.nodes[0].generate(101)
-        block = self.build_block_on_tip()
+        block = self.build_block_on_tip(self.nodes[0])
 
         cmpct_block = P2PHeaderAndShortIDs()
         cmpct_block.header = CBlockHeader(block)
@@ -227,45 +254,61 @@ class CompactBlocksTest(BitcoinTestFramework):
 
     # Compare the generated shortids to what we expect based on BIP 152, given
     # bitcoind's choice of nonce.
-    def test_compactblock_construction(self):
-        print("Testing compactblock headers and shortIDs are correct...")
-
+    def test_compactblock_construction(self, node, test_node, version, use_witness_address):
         # Generate a bunch of transactions.
-        self.nodes[0].generate(101)
+        node.generate(101)
         num_transactions = 25
-        address = self.nodes[0].getnewaddress()
+        address = node.getnewaddress()
+        if use_witness_address:
+            # Want at least one segwit spend, so move all funds to
+            # a witness address.
+            address = node.addwitnessaddress(address)
+            value_to_send = node.getbalance()
+            node.sendtoaddress(address, satoshi_round(value_to_send-Decimal(0.1)))
+            node.generate(1)
+
+        segwit_tx_generated = False
         for i in range(num_transactions):
-            self.nodes[0].sendtoaddress(address, 0.1)
+            txid = node.sendtoaddress(address, 0.1)
+            hex_tx = node.gettransaction(txid)["hex"]
+            tx = FromHex(CTransaction(), hex_tx)
+            if not tx.wit.is_null():
+                segwit_tx_generated = True
+
+        if use_witness_address:
+            assert(segwit_tx_generated) # check that our test is not broken
 
         self.test_node.sync_with_ping()
 
         # Now mine a block, and look at the resulting compact block.
-        self.test_node.clear_block_announcement()
-        block_hash = int(self.nodes[0].generate(1)[0], 16)
+        test_node.clear_block_announcement()
+        block_hash = int(node.generate(1)[0], 16)
 
         # Store the raw block in our internal format.
-        block = FromHex(CBlock(), self.nodes[0].getblock("%02x" % block_hash, False))
+        block = FromHex(CBlock(), node.getblock("%02x" % block_hash, False))
         [tx.calc_sha256() for tx in block.vtx]
         block.rehash()
 
         # Don't care which type of announcement came back for this test; just
         # request the compact block if we didn't get one yet.
-        wait_until(self.test_node.received_block_announcement, timeout=30)
+        wait_until(test_node.received_block_announcement, timeout=30)
+        assert(test_node.received_block_announcement())
 
         with mininode_lock:
-            if self.test_node.last_cmpctblock is None:
-                self.test_node.clear_block_announcement()
+            if test_node.last_cmpctblock is None:
+                test_node.clear_block_announcement()
                 inv = CInv(4, block_hash)  # 4 == "CompactBlock"
-                self.test_node.send_message(msg_getdata([inv]))
+                test_node.send_message(msg_getdata([inv]))
 
-        wait_until(self.test_node.received_block_announcement, timeout=30)
+        wait_until(test_node.received_block_announcement, timeout=30)
+        assert(test_node.received_block_announcement())
 
         # Now we should have the compactblock
         header_and_shortids = None
         with mininode_lock:
-            assert(self.test_node.last_cmpctblock is not None)
+            assert(test_node.last_cmpctblock is not None)
             # Convert the on-the-wire representation to absolute indexes
-            header_and_shortids = HeaderAndShortIDs(self.test_node.last_cmpctblock.header_and_shortids)
+            header_and_shortids = HeaderAndShortIDs(test_node.last_cmpctblock.header_and_shortids)
 
         # Check that we got the right block!
         header_and_shortids.header.calc_sha256()
@@ -278,8 +321,17 @@ class CompactBlocksTest(BitcoinTestFramework):
         # Check that all prefilled_txn entries match what's in the block.
         for entry in header_and_shortids.prefilled_txn:
             entry.tx.calc_sha256()
+            # This checks the non-witness parts of the tx agree
             assert_equal(entry.tx.sha256, block.vtx[entry.index].sha256)
 
+            # And this checks the witness
+            wtxid = entry.tx.calc_sha256(True)
+            if version == 2:
+                assert_equal(wtxid, block.vtx[entry.index].calc_sha256(True))
+            else:
+                # Shouldn't have received a witness
+                assert(entry.tx.wit.is_null())
+
         # Check that the cmpctblock message announced all the transactions.
         assert_equal(len(header_and_shortids.prefilled_txn) + len(header_and_shortids.shortids), len(block.vtx))
 
@@ -294,7 +346,10 @@ class CompactBlocksTest(BitcoinTestFramework):
                 # Already checked prefilled transactions above
                 header_and_shortids.prefilled_txn.pop(0)
             else:
-                shortid = calculate_shortid(k0, k1, block.vtx[index].sha256)
+                tx_hash = block.vtx[index].sha256
+                if version == 2:
+                    tx_hash = block.vtx[index].calc_sha256(True)
+                shortid = calculate_shortid(k0, k1, tx_hash)
                 assert_equal(shortid, header_and_shortids.shortids[0])
                 header_and_shortids.shortids.pop(0)
             index += 1
@@ -302,49 +357,50 @@ class CompactBlocksTest(BitcoinTestFramework):
     # Test that bitcoind requests compact blocks when we announce new blocks
     # via header or inv, and that responding to getblocktxn causes the block
     # to be successfully reconstructed.
-    def test_compactblock_requests(self):
-        print("Testing compactblock requests... ")
-
+    # Post-segwit: upgraded nodes would only make this request of cb-version-2,
+    # NODE_WITNESS peers.  Unupgraded nodes would still make this request of
+    # any cb-version-1-supporting peer.
+    def test_compactblock_requests(self, node, test_node):
         # Try announcing a block with an inv or header, expect a compactblock
         # request
         for announce in ["inv", "header"]:
-            block = self.build_block_on_tip()
+            block = self.build_block_on_tip(node)
             with mininode_lock:
-                self.test_node.last_getdata = None
+                test_node.last_getdata = None
 
             if announce == "inv":
-                self.test_node.send_message(msg_inv([CInv(2, block.sha256)]))
+                test_node.send_message(msg_inv([CInv(2, block.sha256)]))
             else:
-                self.test_node.send_header_for_blocks([block])
-            success = wait_until(lambda: self.test_node.last_getdata is not None, timeout=30)
+                test_node.send_header_for_blocks([block])
+            success = wait_until(lambda: test_node.last_getdata is not None, timeout=30)
             assert(success)
-            assert_equal(len(self.test_node.last_getdata.inv), 1)
-            assert_equal(self.test_node.last_getdata.inv[0].type, 4)
-            assert_equal(self.test_node.last_getdata.inv[0].hash, block.sha256)
+            assert_equal(len(test_node.last_getdata.inv), 1)
+            assert_equal(test_node.last_getdata.inv[0].type, 4)
+            assert_equal(test_node.last_getdata.inv[0].hash, block.sha256)
 
             # Send back a compactblock message that omits the coinbase
             comp_block = HeaderAndShortIDs()
             comp_block.header = CBlockHeader(block)
             comp_block.nonce = 0
             comp_block.shortids = [1]  # this is useless, and wrong
-            self.test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
-            assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.hashPrevBlock)
+            test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
+            assert_equal(int(node.getbestblockhash(), 16), block.hashPrevBlock)
             # Expect a getblocktxn message.
             with mininode_lock:
-                assert(self.test_node.last_getblocktxn is not None)
-                absolute_indexes = self.test_node.last_getblocktxn.block_txn_request.to_absolute()
+                assert(test_node.last_getblocktxn is not None)
+                absolute_indexes = test_node.last_getblocktxn.block_txn_request.to_absolute()
             assert_equal(absolute_indexes, [0])  # should be a coinbase request
 
             # Send the coinbase, and verify that the tip advances.
             msg = msg_blocktxn()
             msg.block_transactions.blockhash = block.sha256
             msg.block_transactions.transactions = [block.vtx[0]]
-            self.test_node.send_and_ping(msg)
-            assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.sha256)
+            test_node.send_and_ping(msg)
+            assert_equal(int(node.getbestblockhash(), 16), block.sha256)
 
     # Create a chain of transactions from given utxo, and add to a new block.
-    def build_block_with_transactions(self, utxo, num_transactions):
-        block = self.build_block_on_tip()
+    def build_block_with_transactions(self, node, utxo, num_transactions):
+        block = self.build_block_on_tip(node)
 
         for i in range(num_transactions):
             tx = CTransaction()
@@ -361,118 +417,113 @@ class CompactBlocksTest(BitcoinTestFramework):
     # Test that we only receive getblocktxn requests for transactions that the
     # node needs, and that responding to them causes the block to be
     # reconstructed.
-    def test_getblocktxn_requests(self):
-        print("Testing getblocktxn requests...")
+    def test_getblocktxn_requests(self, node, test_node, version):
+        with_witness = (version==2)
+
+        def test_getblocktxn_response(compact_block, peer, expected_result):
+            msg = msg_cmpctblock(compact_block.to_p2p())
+            peer.send_and_ping(msg)
+            with mininode_lock:
+                assert(peer.last_getblocktxn is not None)
+                absolute_indexes = peer.last_getblocktxn.block_txn_request.to_absolute()
+            assert_equal(absolute_indexes, expected_result)
+
+        def test_tip_after_message(node, peer, msg, tip):
+            peer.send_and_ping(msg)
+            assert_equal(int(node.getbestblockhash(), 16), tip)
 
         # First try announcing compactblocks that won't reconstruct, and verify
         # that we receive getblocktxn messages back.
         utxo = self.utxos.pop(0)
 
-        block = self.build_block_with_transactions(utxo, 5)
+        block = self.build_block_with_transactions(node, utxo, 5)
         self.utxos.append([block.vtx[-1].sha256, 0, block.vtx[-1].vout[0].nValue])
-
         comp_block = HeaderAndShortIDs()
-        comp_block.initialize_from_block(block)
+        comp_block.initialize_from_block(block, use_witness=with_witness)
 
-        self.test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
-        with mininode_lock:
-            assert(self.test_node.last_getblocktxn is not None)
-            absolute_indexes = self.test_node.last_getblocktxn.block_txn_request.to_absolute()
-        assert_equal(absolute_indexes, [1, 2, 3, 4, 5])
-        msg = msg_blocktxn()
-        msg.block_transactions = BlockTransactions(block.sha256, block.vtx[1:])
-        self.test_node.send_and_ping(msg)
-        assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.sha256)
+        test_getblocktxn_response(comp_block, test_node, [1, 2, 3, 4, 5])
+
+        msg_bt = msg_blocktxn()
+        if with_witness:
+            msg_bt = msg_witness_blocktxn() # serialize with witnesses
+        msg_bt.block_transactions = BlockTransactions(block.sha256, block.vtx[1:])
+        test_tip_after_message(node, test_node, msg_bt, block.sha256)
 
         utxo = self.utxos.pop(0)
-        block = self.build_block_with_transactions(utxo, 5)
+        block = self.build_block_with_transactions(node, utxo, 5)
         self.utxos.append([block.vtx[-1].sha256, 0, block.vtx[-1].vout[0].nValue])
 
         # Now try interspersing the prefilled transactions
-        comp_block.initialize_from_block(block, prefill_list=[0, 1, 5])
-        self.test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
-        with mininode_lock:
-            assert(self.test_node.last_getblocktxn is not None)
-            absolute_indexes = self.test_node.last_getblocktxn.block_txn_request.to_absolute()
-        assert_equal(absolute_indexes, [2, 3, 4])
-        msg.block_transactions = BlockTransactions(block.sha256, block.vtx[2:5])
-        self.test_node.send_and_ping(msg)
-        assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.sha256)
+        comp_block.initialize_from_block(block, prefill_list=[0, 1, 5], use_witness=with_witness)
+        test_getblocktxn_response(comp_block, test_node, [2, 3, 4])
+        msg_bt.block_transactions = BlockTransactions(block.sha256, block.vtx[2:5])
+        test_tip_after_message(node, test_node, msg_bt, block.sha256)
 
         # Now try giving one transaction ahead of time.
         utxo = self.utxos.pop(0)
-        block = self.build_block_with_transactions(utxo, 5)
+        block = self.build_block_with_transactions(node, utxo, 5)
         self.utxos.append([block.vtx[-1].sha256, 0, block.vtx[-1].vout[0].nValue])
-        self.test_node.send_and_ping(msg_tx(block.vtx[1]))
-        assert(block.vtx[1].hash in self.nodes[0].getrawmempool())
+        test_node.send_and_ping(msg_tx(block.vtx[1]))
+        assert(block.vtx[1].hash in node.getrawmempool())
 
         # Prefill 4 out of the 6 transactions, and verify that only the one
         # that was not in the mempool is requested.
-        comp_block.initialize_from_block(block, prefill_list=[0, 2, 3, 4])
-        self.test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
-        with mininode_lock:
-            assert(self.test_node.last_getblocktxn is not None)
-            absolute_indexes = self.test_node.last_getblocktxn.block_txn_request.to_absolute()
-        assert_equal(absolute_indexes, [5])
+        comp_block.initialize_from_block(block, prefill_list=[0, 2, 3, 4], use_witness=with_witness)
+        test_getblocktxn_response(comp_block, test_node, [5])
 
-        msg.block_transactions = BlockTransactions(block.sha256, [block.vtx[5]])
-        self.test_node.send_and_ping(msg)
-        assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.sha256)
+        msg_bt.block_transactions = BlockTransactions(block.sha256, [block.vtx[5]])
+        test_tip_after_message(node, test_node, msg_bt, block.sha256)
 
         # Now provide all transactions to the node before the block is
         # announced and verify reconstruction happens immediately.
         utxo = self.utxos.pop(0)
-        block = self.build_block_with_transactions(utxo, 10)
+        block = self.build_block_with_transactions(node, utxo, 10)
         self.utxos.append([block.vtx[-1].sha256, 0, block.vtx[-1].vout[0].nValue])
         for tx in block.vtx[1:]:
-            self.test_node.send_message(msg_tx(tx))
-        self.test_node.sync_with_ping()
+            test_node.send_message(msg_tx(tx))
+        test_node.sync_with_ping()
         # Make sure all transactions were accepted.
-        mempool = self.nodes[0].getrawmempool()
+        mempool = node.getrawmempool()
         for tx in block.vtx[1:]:
             assert(tx.hash in mempool)
 
         # Clear out last request.
         with mininode_lock:
-            self.test_node.last_getblocktxn = None
+            test_node.last_getblocktxn = None
 
         # Send compact block
-        comp_block.initialize_from_block(block, prefill_list=[0])
-        self.test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
+        comp_block.initialize_from_block(block, prefill_list=[0], use_witness=with_witness)
+        test_tip_after_message(node, test_node, msg_cmpctblock(comp_block.to_p2p()), block.sha256)
         with mininode_lock:
             # Shouldn't have gotten a request for any transaction
-            assert(self.test_node.last_getblocktxn is None)
-        # Tip should have updated
-        assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.sha256)
+            assert(test_node.last_getblocktxn is None)
 
     # Incorrectly responding to a getblocktxn shouldn't cause the block to be
     # permanently failed.
-    def test_incorrect_blocktxn_response(self):
-        print("Testing handling of incorrect blocktxn responses...")
-
+    def test_incorrect_blocktxn_response(self, node, test_node, version):
         if (len(self.utxos) == 0):
             self.make_utxos()
         utxo = self.utxos.pop(0)
 
-        block = self.build_block_with_transactions(utxo, 10)
+        block = self.build_block_with_transactions(node, utxo, 10)
         self.utxos.append([block.vtx[-1].sha256, 0, block.vtx[-1].vout[0].nValue])
         # Relay the first 5 transactions from the block in advance
         for tx in block.vtx[1:6]:
-            self.test_node.send_message(msg_tx(tx))
-        self.test_node.sync_with_ping()
+            test_node.send_message(msg_tx(tx))
+        test_node.sync_with_ping()
         # Make sure all transactions were accepted.
-        mempool = self.nodes[0].getrawmempool()
+        mempool = node.getrawmempool()
         for tx in block.vtx[1:6]:
             assert(tx.hash in mempool)
 
         # Send compact block
         comp_block = HeaderAndShortIDs()
-        comp_block.initialize_from_block(block, prefill_list=[0])
-        self.test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
+        comp_block.initialize_from_block(block, prefill_list=[0], use_witness=(version == 2))
+        test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
         absolute_indexes = []
         with mininode_lock:
-            assert(self.test_node.last_getblocktxn is not None)
-            absolute_indexes = self.test_node.last_getblocktxn.block_txn_request.to_absolute()
+            assert(test_node.last_getblocktxn is not None)
+            absolute_indexes = test_node.last_getblocktxn.block_txn_request.to_absolute()
         assert_equal(absolute_indexes, [6, 7, 8, 9, 10])
 
         # Now give an incorrect response.
@@ -484,100 +535,107 @@ class CompactBlocksTest(BitcoinTestFramework):
         # verifying that the block isn't marked bad permanently. This is good
         # enough for now.
         msg = msg_blocktxn()
+        if version==2:
+            msg = msg_witness_blocktxn()
         msg.block_transactions = BlockTransactions(block.sha256, [block.vtx[5]] + block.vtx[7:])
-        self.test_node.send_and_ping(msg)
+        test_node.send_and_ping(msg)
 
         # Tip should not have updated
-        assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.hashPrevBlock)
+        assert_equal(int(node.getbestblockhash(), 16), block.hashPrevBlock)
 
         # We should receive a getdata request
-        success = wait_until(lambda: self.test_node.last_getdata is not None, timeout=10)
+        success = wait_until(lambda: test_node.last_getdata is not None, timeout=10)
         assert(success)
-        assert_equal(len(self.test_node.last_getdata.inv), 1)
-        assert_equal(self.test_node.last_getdata.inv[0].type, 2)
-        assert_equal(self.test_node.last_getdata.inv[0].hash, block.sha256)
+        assert_equal(len(test_node.last_getdata.inv), 1)
+        assert(test_node.last_getdata.inv[0].type == 2 or test_node.last_getdata.inv[0].type == 2|MSG_WITNESS_FLAG)
+        assert_equal(test_node.last_getdata.inv[0].hash, block.sha256)
 
         # Deliver the block
-        self.test_node.send_and_ping(msg_block(block))
-        assert_equal(int(self.nodes[0].getbestblockhash(), 16), block.sha256)
-
-    def test_getblocktxn_handler(self):
-        print("Testing getblocktxn handler...")
+        if version==2:
+            test_node.send_and_ping(msg_witness_block(block))
+        else:
+            test_node.send_and_ping(msg_block(block))
+        assert_equal(int(node.getbestblockhash(), 16), block.sha256)
 
+    def test_getblocktxn_handler(self, node, test_node, version):
         # bitcoind won't respond for blocks whose height is more than 15 blocks
         # deep.
         MAX_GETBLOCKTXN_DEPTH = 15
-        chain_height = self.nodes[0].getblockcount()
+        chain_height = node.getblockcount()
         current_height = chain_height
         while (current_height >= chain_height - MAX_GETBLOCKTXN_DEPTH):
-            block_hash = self.nodes[0].getblockhash(current_height)
-            block = FromHex(CBlock(), self.nodes[0].getblock(block_hash, False))
+            block_hash = node.getblockhash(current_height)
+            block = FromHex(CBlock(), node.getblock(block_hash, False))
 
             msg = msg_getblocktxn()
             msg.block_txn_request = BlockTransactionsRequest(int(block_hash, 16), [])
             num_to_request = random.randint(1, len(block.vtx))
             msg.block_txn_request.from_absolute(sorted(random.sample(range(len(block.vtx)), num_to_request)))
-            self.test_node.send_message(msg)
-            success = wait_until(lambda: self.test_node.last_blocktxn is not None, timeout=10)
+            test_node.send_message(msg)
+            success = wait_until(lambda: test_node.last_blocktxn is not None, timeout=10)
             assert(success)
 
             [tx.calc_sha256() for tx in block.vtx]
             with mininode_lock:
-                assert_equal(self.test_node.last_blocktxn.block_transactions.blockhash, int(block_hash, 16))
+                assert_equal(test_node.last_blocktxn.block_transactions.blockhash, int(block_hash, 16))
                 all_indices = msg.block_txn_request.to_absolute()
                 for index in all_indices:
-                    tx = self.test_node.last_blocktxn.block_transactions.transactions.pop(0)
+                    tx = test_node.last_blocktxn.block_transactions.transactions.pop(0)
                     tx.calc_sha256()
                     assert_equal(tx.sha256, block.vtx[index].sha256)
-                self.test_node.last_blocktxn = None
+                    if version == 1:
+                        # Witnesses should have been stripped
+                        assert(tx.wit.is_null())
+                    else:
+                        # Check that the witness matches
+                        assert_equal(tx.calc_sha256(True), block.vtx[index].calc_sha256(True))
+                test_node.last_blocktxn = None
             current_height -= 1
 
         # Next request should be ignored, as we're past the allowed depth.
-        block_hash = self.nodes[0].getblockhash(current_height)
+        block_hash = node.getblockhash(current_height)
         msg.block_txn_request = BlockTransactionsRequest(int(block_hash, 16), [0])
-        self.test_node.send_and_ping(msg)
+        test_node.send_and_ping(msg)
         with mininode_lock:
-            assert_equal(self.test_node.last_blocktxn, None)
-
-    def test_compactblocks_not_at_tip(self):
-        print("Testing compactblock requests/announcements not at chain tip...")
+            assert_equal(test_node.last_blocktxn, None)
 
+    def test_compactblocks_not_at_tip(self, node, test_node):
         # Test that requesting old compactblocks doesn't work.
         MAX_CMPCTBLOCK_DEPTH = 11
         new_blocks = []
         for i in range(MAX_CMPCTBLOCK_DEPTH):
-            self.test_node.clear_block_announcement()
-            new_blocks.append(self.nodes[0].generate(1)[0])
-            wait_until(self.test_node.received_block_announcement, timeout=30)
+            test_node.clear_block_announcement()
+            new_blocks.append(node.generate(1)[0])
+            wait_until(test_node.received_block_announcement, timeout=30)
 
-        self.test_node.clear_block_announcement()
-        self.test_node.send_message(msg_getdata([CInv(4, int(new_blocks[0], 16))]))
-        success = wait_until(lambda: self.test_node.last_cmpctblock is not None, timeout=30)
+        test_node.clear_block_announcement()
+        test_node.send_message(msg_getdata([CInv(4, int(new_blocks[0], 16))]))
+        success = wait_until(lambda: test_node.last_cmpctblock is not None, timeout=30)
         assert(success)
 
-        self.test_node.clear_block_announcement()
-        self.nodes[0].generate(1)
-        wait_until(self.test_node.received_block_announcement, timeout=30)
-        self.test_node.clear_block_announcement()
-        self.test_node.send_message(msg_getdata([CInv(4, int(new_blocks[0], 16))]))
-        success = wait_until(lambda: self.test_node.last_block is not None, timeout=30)
+        test_node.clear_block_announcement()
+        node.generate(1)
+        wait_until(test_node.received_block_announcement, timeout=30)
+        test_node.clear_block_announcement()
+        test_node.send_message(msg_getdata([CInv(4, int(new_blocks[0], 16))]))
+        success = wait_until(lambda: test_node.last_block is not None, timeout=30)
         assert(success)
         with mininode_lock:
-            self.test_node.last_block.block.calc_sha256()
-            assert_equal(self.test_node.last_block.block.sha256, int(new_blocks[0], 16))
+            test_node.last_block.block.calc_sha256()
+            assert_equal(test_node.last_block.block.sha256, int(new_blocks[0], 16))
 
         # Generate an old compactblock, and verify that it's not accepted.
-        cur_height = self.nodes[0].getblockcount()
-        hashPrevBlock = int(self.nodes[0].getblockhash(cur_height-5), 16)
-        block = self.build_block_on_tip()
+        cur_height = node.getblockcount()
+        hashPrevBlock = int(node.getblockhash(cur_height-5), 16)
+        block = self.build_block_on_tip(node)
         block.hashPrevBlock = hashPrevBlock
         block.solve()
 
         comp_block = HeaderAndShortIDs()
         comp_block.initialize_from_block(block)
-        self.test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
+        test_node.send_and_ping(msg_cmpctblock(comp_block.to_p2p()))
 
-        tips = self.nodes[0].getchaintips()
+        tips = node.getchaintips()
         found = False
         for x in tips:
             if x["hash"] == block.hash:
@@ -591,18 +649,61 @@ class CompactBlocksTest(BitcoinTestFramework):
         msg = msg_getblocktxn()
         msg.block_txn_request = BlockTransactionsRequest(block.sha256, [0])
         with mininode_lock:
-            self.test_node.last_blocktxn = None
-        self.test_node.send_and_ping(msg)
+            test_node.last_blocktxn = None
+        test_node.send_and_ping(msg)
         with mininode_lock:
-            assert(self.test_node.last_blocktxn is None)
+            assert(test_node.last_blocktxn is None)
+
+    def activate_segwit(self, node):
+        node.generate(144*3)
+        assert_equal(get_bip9_status(node, "segwit")["status"], 'active')
+
+    def test_end_to_end_block_relay(self, node, listeners):
+        utxo = self.utxos.pop(0)
+
+        block = self.build_block_with_transactions(node, utxo, 10)
+
+        [l.clear_block_announcement() for l in listeners]
+
+        # ToHex() won't serialize with witness, but this block has no witnesses
+        # anyway. TODO: repeat this test with witness tx's to a segwit node.
+        node.submitblock(ToHex(block))
+
+        for l in listeners:
+            wait_until(lambda: l.received_block_announcement(), timeout=30)
+        with mininode_lock:
+            for l in listeners:
+                assert(l.last_cmpctblock is not None)
+                l.last_cmpctblock.header_and_shortids.header.calc_sha256()
+                assert_equal(l.last_cmpctblock.header_and_shortids.header.sha256, block.sha256)
+
+    # Helper for enabling cb announcements
+    # Send the sendcmpct request and sync headers
+    def request_cb_announcements(self, peer, node, version):
+        tip = node.getbestblockhash()
+        peer.get_headers(locator=[int(tip, 16)], hashstop=0)
+
+        msg = msg_sendcmpct()
+        msg.version = version
+        msg.announce = True
+        peer.send_and_ping(msg)
+
 
     def run_test(self):
         # Setup the p2p connections and start up the network thread.
         self.test_node = TestNode()
+        self.segwit_node = TestNode()
+        self.old_node = TestNode()  # version 1 peer <--> segwit node
 
         connections = []
         connections.append(NodeConn('127.0.0.1', p2p_port(0), self.nodes[0], self.test_node))
+        connections.append(NodeConn('127.0.0.1', p2p_port(1), self.nodes[1],
+                    self.segwit_node, services=NODE_NETWORK|NODE_WITNESS))
+        connections.append(NodeConn('127.0.0.1', p2p_port(1), self.nodes[1],
+                    self.old_node, services=NODE_NETWORK))
         self.test_node.add_connection(connections[0])
+        self.segwit_node.add_connection(connections[1])
+        self.old_node.add_connection(connections[2])
 
         NetworkThread().start()  # Start up network handling in another thread
 
@@ -612,13 +713,107 @@ class CompactBlocksTest(BitcoinTestFramework):
         # We will need UTXOs to construct transactions in later tests.
         self.make_utxos()
 
-        self.test_sendcmpct()
-        self.test_compactblock_construction()
-        self.test_compactblock_requests()
-        self.test_getblocktxn_requests()
-        self.test_getblocktxn_handler()
-        self.test_compactblocks_not_at_tip()
-        self.test_incorrect_blocktxn_response()
+        print("Running tests, pre-segwit activation:")
+
+        print("\tTesting SENDCMPCT p2p message... ")
+        self.test_sendcmpct(self.nodes[0], self.test_node, 1)
+        sync_blocks(self.nodes)
+        self.test_sendcmpct(self.nodes[1], self.segwit_node, 2, old_node=self.old_node)
+        sync_blocks(self.nodes)
+
+        print("\tTesting compactblock construction...")
+        self.test_compactblock_construction(self.nodes[0], self.test_node, 1, False)
+        sync_blocks(self.nodes)
+        self.test_compactblock_construction(self.nodes[1], self.segwit_node, 2, False)
+        sync_blocks(self.nodes)
+
+        print("\tTesting compactblock requests... ")
+        self.test_compactblock_requests(self.nodes[0], self.test_node)
+        sync_blocks(self.nodes)
+        self.test_compactblock_requests(self.nodes[1], self.segwit_node)
+        sync_blocks(self.nodes)
+
+        print("\tTesting getblocktxn requests...")
+        self.test_getblocktxn_requests(self.nodes[0], self.test_node, 1)
+        sync_blocks(self.nodes)
+        self.test_getblocktxn_requests(self.nodes[1], self.segwit_node, 2)
+        sync_blocks(self.nodes)
+
+        print("\tTesting getblocktxn handler...")
+        self.test_getblocktxn_handler(self.nodes[0], self.test_node, 1)
+        sync_blocks(self.nodes)
+        self.test_getblocktxn_handler(self.nodes[1], self.segwit_node, 2)
+        self.test_getblocktxn_handler(self.nodes[1], self.old_node, 1)
+        sync_blocks(self.nodes)
+
+        print("\tTesting compactblock requests/announcements not at chain tip...")
+        self.test_compactblocks_not_at_tip(self.nodes[0], self.test_node)
+        sync_blocks(self.nodes)
+        self.test_compactblocks_not_at_tip(self.nodes[1], self.segwit_node)
+        self.test_compactblocks_not_at_tip(self.nodes[1], self.old_node)
+        sync_blocks(self.nodes)
+
+        print("\tTesting handling of incorrect blocktxn responses...")
+        self.test_incorrect_blocktxn_response(self.nodes[0], self.test_node, 1)
+        sync_blocks(self.nodes)
+        self.test_incorrect_blocktxn_response(self.nodes[1], self.segwit_node, 2)
+        sync_blocks(self.nodes)
+
+        # End-to-end block relay tests
+        print("\tTesting end-to-end block relay...")
+        self.request_cb_announcements(self.test_node, self.nodes[0], 1)
+        self.request_cb_announcements(self.old_node, self.nodes[1], 1)
+        self.request_cb_announcements(self.segwit_node, self.nodes[1], 2)
+        self.test_end_to_end_block_relay(self.nodes[0], [self.segwit_node, self.test_node, self.old_node])
+        self.test_end_to_end_block_relay(self.nodes[1], [self.segwit_node, self.test_node, self.old_node])
+
+        # Advance to segwit activation
+        print ("\nAdvancing to segwit activation\n")
+        self.activate_segwit(self.nodes[1])
+        print ("Running tests, post-segwit activation...")
+
+        print("\tTesting compactblock construction...")
+        self.test_compactblock_construction(self.nodes[1], self.old_node, 1, True)
+        self.test_compactblock_construction(self.nodes[1], self.segwit_node, 2, True)
+        sync_blocks(self.nodes)
+
+        print("\tTesting compactblock requests (unupgraded node)... ")
+        self.test_compactblock_requests(self.nodes[0], self.test_node)
+
+        print("\tTesting getblocktxn requests (unupgraded node)...")
+        self.test_getblocktxn_requests(self.nodes[0], self.test_node, 1)
+
+        # Need to manually sync node0 and node1, because post-segwit activation,
+        # node1 will not download blocks from node0.
+        print("\tSyncing nodes...")
+        assert(self.nodes[0].getbestblockhash() != self.nodes[1].getbestblockhash())
+        while (self.nodes[0].getblockcount() > self.nodes[1].getblockcount()):
+            block_hash = self.nodes[0].getblockhash(self.nodes[1].getblockcount()+1)
+            self.nodes[1].submitblock(self.nodes[0].getblock(block_hash, False))
+        assert_equal(self.nodes[0].getbestblockhash(), self.nodes[1].getbestblockhash())
+
+        print("\tTesting compactblock requests (segwit node)... ")
+        self.test_compactblock_requests(self.nodes[1], self.segwit_node)
+
+        print("\tTesting getblocktxn requests (segwit node)...")
+        self.test_getblocktxn_requests(self.nodes[1], self.segwit_node, 2)
+        sync_blocks(self.nodes)
+
+        print("\tTesting getblocktxn handler (segwit node should return witnesses)...")
+        self.test_getblocktxn_handler(self.nodes[1], self.segwit_node, 2)
+        self.test_getblocktxn_handler(self.nodes[1], self.old_node, 1)
+
+        # Test that if we submitblock to node1, we'll get a compact block
+        # announcement to all peers.
+        # (Post-segwit activation, blocks won't propagate from node0 to node1
+        # automatically, so don't bother testing a block announced to node0.)
+        print("\tTesting end-to-end block relay...")
+        self.request_cb_announcements(self.test_node, self.nodes[0], 1)
+        self.request_cb_announcements(self.old_node, self.nodes[1], 1)
+        self.request_cb_announcements(self.segwit_node, self.nodes[1], 2)
+        self.test_end_to_end_block_relay(self.nodes[1], [self.segwit_node, self.test_node, self.old_node])
+
+        print("\tTesting invalid index in cmpctblock message...")
         self.test_invalid_cmpctblock_message()
 
 
diff --git a/qa/rpc-tests/p2p-segwit.py b/qa/rpc-tests/p2p-segwit.py
index 5c1eb21b1f..c2ea20bb84 100755
--- a/qa/rpc-tests/p2p-segwit.py
+++ b/qa/rpc-tests/p2p-segwit.py
@@ -912,14 +912,6 @@ class SegWitTest(BitcoinTestFramework):
         # But eliminating the witness should fix it
         self.test_node.test_transaction_acceptance(tx, with_witness=False, accepted=True)
 
-        # Verify that inv's to test_node come with getdata's for non-witness tx's
-        # Just tweak the transaction, announce it, and verify we get a getdata
-        # for a normal tx
-        tx.vout[0].scriptPubKey = CScript([OP_TRUE, OP_TRUE])
-        tx.rehash()
-        self.test_node.announce_tx_and_wait_for_getdata(tx)
-        assert(self.test_node.last_getdata.inv[0].type == 1)
-
         # Cleanup: mine the first transaction and update utxo
         self.nodes[0].generate(1)
         assert_equal(len(self.nodes[0].getrawmempool()),  0)
@@ -1025,7 +1017,7 @@ class SegWitTest(BitcoinTestFramework):
     def test_block_relay(self, segwit_activated):
         print("\tTesting block relay")
 
-        blocktype = 2|MSG_WITNESS_FLAG if segwit_activated else 2
+        blocktype = 2|MSG_WITNESS_FLAG
 
         # test_node has set NODE_WITNESS, so all getdata requests should be for
         # witness blocks.
diff --git a/qa/rpc-tests/test_framework/mininode.py b/qa/rpc-tests/test_framework/mininode.py
index 88a3b7e0f7..4d238c08d9 100755
--- a/qa/rpc-tests/test_framework/mininode.py
+++ b/qa/rpc-tests/test_framework/mininode.py
@@ -452,7 +452,7 @@ class CTransaction(object):
         else:
             self.vout = deser_vector(f, CTxOut)
         if flags != 0:
-            self.wit.vtxinwit = [CTxInWitness()]*len(self.vin)
+            self.wit.vtxinwit = [CTxInWitness() for i in range(len(self.vin))]
             self.wit.deserialize(f)
         self.nLockTime = struct.unpack("<I", f.read(4))[0]
         self.sha256 = None
@@ -518,8 +518,8 @@ class CTransaction(object):
         return True
 
     def __repr__(self):
-        return "CTransaction(nVersion=%i vin=%s vout=%s nLockTime=%i)" \
-            % (self.nVersion, repr(self.vin), repr(self.vout), self.nLockTime)
+        return "CTransaction(nVersion=%i vin=%s vout=%s wit=%s nLockTime=%i)" \
+            % (self.nVersion, repr(self.vin), repr(self.vout), repr(self.wit), self.nLockTime)
 
 
 class CBlockHeader(object):
@@ -755,6 +755,9 @@ class PrefilledTransaction(object):
             r += self.tx.serialize_without_witness()
         return r
 
+    def serialize_with_witness(self):
+        return self.serialize(with_witness=True)
+
     def __repr__(self):
         return "PrefilledTransaction(index=%d, tx=%s)" % (self.index, repr(self.tx))
 
@@ -779,6 +782,7 @@ class P2PHeaderAndShortIDs(object):
         self.prefilled_txn = deser_vector(f, PrefilledTransaction)
         self.prefilled_txn_length = len(self.prefilled_txn)
 
+    # When using version 2 compact blocks, we must serialize with_witness.
     def serialize(self, with_witness=False):
         r = b""
         r += self.header.serialize()
@@ -787,12 +791,20 @@ class P2PHeaderAndShortIDs(object):
         for x in self.shortids:
             # We only want the first 6 bytes
             r += struct.pack("<Q", x)[0:6]
-        r += ser_vector(self.prefilled_txn)
+        if with_witness:
+            r += ser_vector(self.prefilled_txn, "serialize_with_witness")
+        else:
+            r += ser_vector(self.prefilled_txn)
         return r
 
     def __repr__(self):
         return "P2PHeaderAndShortIDs(header=%s, nonce=%d, shortids_length=%d, shortids=%s, prefilled_txn_length=%d, prefilledtxn=%s" % (repr(self.header), self.nonce, self.shortids_length, repr(self.shortids), self.prefilled_txn_length, repr(self.prefilled_txn))
 
+# P2P version of the above that will use witness serialization (for compact
+# block version 2)
+class P2PHeaderAndShortWitnessIDs(P2PHeaderAndShortIDs):
+    def serialize(self):
+        return super(P2PHeaderAndShortWitnessIDs, self).serialize(with_witness=True)
 
 # Calculate the BIP 152-compact blocks shortid for a given transaction hash
 def calculate_shortid(k0, k1, tx_hash):
@@ -808,6 +820,7 @@ class HeaderAndShortIDs(object):
         self.nonce = 0
         self.shortids = []
         self.prefilled_txn = []
+        self.use_witness = False
 
         if p2pheaders_and_shortids != None:
             self.header = p2pheaders_and_shortids.header
@@ -819,7 +832,10 @@ class HeaderAndShortIDs(object):
                 last_index = self.prefilled_txn[-1].index
 
     def to_p2p(self):
-        ret = P2PHeaderAndShortIDs()
+        if self.use_witness:
+            ret = P2PHeaderAndShortWitnessIDs()
+        else:
+            ret = P2PHeaderAndShortIDs()
         ret.header = self.header
         ret.nonce = self.nonce
         ret.shortids_length = len(self.shortids)
@@ -840,15 +856,20 @@ class HeaderAndShortIDs(object):
         key1 = struct.unpack("<Q", hash_header_nonce_as_str[8:16])[0]
         return [ key0, key1 ]
 
-    def initialize_from_block(self, block, nonce=0, prefill_list = [0]):
+    # Version 2 compact blocks use wtxid in shortids (rather than txid)
+    def initialize_from_block(self, block, nonce=0, prefill_list = [0], use_witness = False):
         self.header = CBlockHeader(block)
         self.nonce = nonce
         self.prefilled_txn = [ PrefilledTransaction(i, block.vtx[i]) for i in prefill_list ]
         self.shortids = []
+        self.use_witness = use_witness
         [k0, k1] = self.get_siphash_keys()
         for i in range(len(block.vtx)):
             if i not in prefill_list:
-                self.shortids.append(calculate_shortid(k0, k1, block.vtx[i].sha256))
+                tx_hash = block.vtx[i].sha256
+                if use_witness:
+                    tx_hash = block.vtx[i].calc_sha256(with_witness=True)
+                self.shortids.append(calculate_shortid(k0, k1, tx_hash))
 
     def __repr__(self):
         return "HeaderAndShortIDs(header=%s, nonce=%d, shortids=%s, prefilledtxn=%s" % (repr(self.header), self.nonce, repr(self.shortids), repr(self.prefilled_txn))
@@ -1424,6 +1445,12 @@ class msg_blocktxn(object):
     def __repr__(self):
         return "msg_blocktxn(block_transactions=%s)" % (repr(self.block_transactions))
 
+class msg_witness_blocktxn(msg_blocktxn):
+    def serialize(self):
+        r = b""
+        r += self.block_transactions.serialize(with_witness=True)
+        return r
+
 # This is what a callback should look like for NodeConn
 # Reimplement the on_* functions to provide handling for events
 class NodeConnCB(object):
diff --git a/src/blockencodings.cpp b/src/blockencodings.cpp
index df237f8f26..93d3fa372b 100644
--- a/src/blockencodings.cpp
+++ b/src/blockencodings.cpp
@@ -17,7 +17,7 @@
 
 #define MIN_TRANSACTION_BASE_SIZE (::GetSerializeSize(CTransaction(), SER_NETWORK, PROTOCOL_VERSION | SERIALIZE_TRANSACTION_NO_WITNESS))
 
-CBlockHeaderAndShortTxIDs::CBlockHeaderAndShortTxIDs(const CBlock& block) :
+CBlockHeaderAndShortTxIDs::CBlockHeaderAndShortTxIDs(const CBlock& block, bool fUseWTXID) :
         nonce(GetRand(std::numeric_limits<uint64_t>::max())),
         shorttxids(block.vtx.size() - 1), prefilledtxn(1), header(block) {
     FillShortTxIDSelector();
@@ -25,7 +25,7 @@ CBlockHeaderAndShortTxIDs::CBlockHeaderAndShortTxIDs(const CBlock& block) :
     prefilledtxn[0] = {0, block.vtx[0]};
     for (size_t i = 1; i < block.vtx.size(); i++) {
         const CTransaction& tx = block.vtx[i];
-        shorttxids[i - 1] = GetShortID(tx.GetHash());
+        shorttxids[i - 1] = GetShortID(fUseWTXID ? tx.GetWitnessHash() : tx.GetHash());
     }
 }
 
diff --git a/src/blockencodings.h b/src/blockencodings.h
index 349fcbd50f..99b1cb140d 100644
--- a/src/blockencodings.h
+++ b/src/blockencodings.h
@@ -146,7 +146,7 @@ public:
     // Dummy for deserialization
     CBlockHeaderAndShortTxIDs() {}
 
-    CBlockHeaderAndShortTxIDs(const CBlock& block);
+    CBlockHeaderAndShortTxIDs(const CBlock& block, bool fUseWTXID);
 
     uint64_t GetShortID(const uint256& txhash) const;
 
diff --git a/src/main.cpp b/src/main.cpp
index 437e972382..c92a38be98 100644
--- a/src/main.cpp
+++ b/src/main.cpp
@@ -289,10 +289,21 @@ struct CNodeState {
     bool fPreferHeaders;
     //! Whether this peer wants invs or cmpctblocks (when possible) for block announcements.
     bool fPreferHeaderAndIDs;
-    //! Whether this peer will send us cmpctblocks if we request them
+    /**
+      * Whether this peer will send us cmpctblocks if we request them.
+      * This is not used to gate request logic, as we really only care about fSupportsDesiredCmpctVersion,
+      * but is used as a flag to "lock in" the version of compact blocks (fWantsCmpctWitness) we send.
+      */
     bool fProvidesHeaderAndIDs;
     //! Whether this peer can give us witnesses
     bool fHaveWitness;
+    //! Whether this peer wants witnesses in cmpctblocks/blocktxns
+    bool fWantsCmpctWitness;
+    /**
+     * If we've announced NODE_WITNESS to this peer: whether the peer sends witnesses in cmpctblocks/blocktxns,
+     * otherwise: whether this peer sends non-witnesses in cmpctblocks/blocktxns.
+     */
+    bool fSupportsDesiredCmpctVersion;
 
     CNodeState() {
         fCurrentlyConnected = false;
@@ -313,6 +324,8 @@ struct CNodeState {
         fPreferHeaderAndIDs = false;
         fProvidesHeaderAndIDs = false;
         fHaveWitness = false;
+        fWantsCmpctWitness = false;
+        fSupportsDesiredCmpctVersion = false;
     }
 };
 
@@ -467,8 +480,8 @@ void UpdateBlockAvailability(NodeId nodeid, const uint256 &hash) {
 }
 
 void MaybeSetPeerAsAnnouncingHeaderAndIDs(const CNodeState* nodestate, CNode* pfrom, CConnman& connman) {
-    if (pfrom->GetLocalServices() & NODE_WITNESS) {
-        // Don't ever request compact blocks when segwit is enabled.
+    if (!nodestate->fSupportsDesiredCmpctVersion) {
+        // Never ask from peers who can't provide witnesses.
         return;
     }
     if (nodestate->fProvidesHeaderAndIDs) {
@@ -476,7 +489,7 @@ void MaybeSetPeerAsAnnouncingHeaderAndIDs(const CNodeState* nodestate, CNode* pf
             if (nodeid == pfrom->GetId())
                 return;
         bool fAnnounceUsingCMPCTBLOCK = false;
-        uint64_t nCMPCTBLOCKVersion = 1;
+        uint64_t nCMPCTBLOCKVersion = (pfrom->GetLocalServices() & NODE_WITNESS) ? 2 : 1;
         if (lNodesAnnouncingHeaderAndIDs.size() >= 3) {
             // As per BIP152, we only get 3 of our peers to announce
             // blocks using compact encodings.
@@ -4856,11 +4869,12 @@ void static ProcessGetData(CNode* pfrom, const Consensus::Params& consensusParam
                         // they wont have a useful mempool to match against a compact block,
                         // and we don't feel like constructing the object for them, so
                         // instead we respond with the full, non-compact block.
+                        bool fPeerWantsWitness = State(pfrom->GetId())->fWantsCmpctWitness;
                         if (mi->second->nHeight >= chainActive.Height() - 10) {
-                            CBlockHeaderAndShortTxIDs cmpctblock(block);
-                            pfrom->PushMessageWithFlag(SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::CMPCTBLOCK, cmpctblock);
+                            CBlockHeaderAndShortTxIDs cmpctblock(block, fPeerWantsWitness);
+                            pfrom->PushMessageWithFlag(fPeerWantsWitness ? 0 : SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::CMPCTBLOCK, cmpctblock);
                         } else
-                            pfrom->PushMessageWithFlag(SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::BLOCK, block);
+                            pfrom->PushMessageWithFlag(fPeerWantsWitness ? 0 : SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::BLOCK, block);
                     }
 
                     // Trigger the peer node to send a getblocks request for the next batch of inventory
@@ -4922,7 +4936,7 @@ void static ProcessGetData(CNode* pfrom, const Consensus::Params& consensusParam
 
 uint32_t GetFetchFlags(CNode* pfrom, CBlockIndex* pprev, const Consensus::Params& chainparams) {
     uint32_t nFetchFlags = 0;
-    if (IsWitnessEnabled(pprev, chainparams) && State(pfrom->GetId())->fHaveWitness) {
+    if ((pfrom->GetLocalServices() & NODE_WITNESS) && State(pfrom->GetId())->fHaveWitness) {
         nFetchFlags |= MSG_WITNESS_FLAG;
     }
     return nFetchFlags;
@@ -5128,13 +5142,16 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
             pfrom->PushMessage(NetMsgType::SENDHEADERS);
         }
         if (pfrom->nVersion >= SHORT_IDS_BLOCKS_VERSION) {
-            // Tell our peer we are willing to provide version-1 cmpctblocks
+            // Tell our peer we are willing to provide version 1 or 2 cmpctblocks
             // However, we do not request new block announcements using
             // cmpctblock messages.
             // We send this to non-NODE NETWORK peers as well, because
             // they may wish to request compact blocks from us
             bool fAnnounceUsingCMPCTBLOCK = false;
-            uint64_t nCMPCTBLOCKVersion = 1;
+            uint64_t nCMPCTBLOCKVersion = 2;
+            if (pfrom->GetLocalServices() & NODE_WITNESS)
+                pfrom->PushMessage(NetMsgType::SENDCMPCT, fAnnounceUsingCMPCTBLOCK, nCMPCTBLOCKVersion);
+            nCMPCTBLOCKVersion = 1;
             pfrom->PushMessage(NetMsgType::SENDCMPCT, fAnnounceUsingCMPCTBLOCK, nCMPCTBLOCKVersion);
         }
     }
@@ -5195,12 +5212,23 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
     else if (strCommand == NetMsgType::SENDCMPCT)
     {
         bool fAnnounceUsingCMPCTBLOCK = false;
-        uint64_t nCMPCTBLOCKVersion = 1;
+        uint64_t nCMPCTBLOCKVersion = 0;
         vRecv >> fAnnounceUsingCMPCTBLOCK >> nCMPCTBLOCKVersion;
-        if (nCMPCTBLOCKVersion == 1) {
+        if (nCMPCTBLOCKVersion == 1 || ((pfrom->GetLocalServices() & NODE_WITNESS) && nCMPCTBLOCKVersion == 2)) {
             LOCK(cs_main);
-            State(pfrom->GetId())->fProvidesHeaderAndIDs = true;
-            State(pfrom->GetId())->fPreferHeaderAndIDs = fAnnounceUsingCMPCTBLOCK;
+            // fProvidesHeaderAndIDs is used to "lock in" version of compact blocks we send (fWantsCmpctWitness)
+            if (!State(pfrom->GetId())->fProvidesHeaderAndIDs) {
+                State(pfrom->GetId())->fProvidesHeaderAndIDs = true;
+                State(pfrom->GetId())->fWantsCmpctWitness = nCMPCTBLOCKVersion == 2;
+            }
+            if (State(pfrom->GetId())->fWantsCmpctWitness == (nCMPCTBLOCKVersion == 2)) // ignore later version announces
+                State(pfrom->GetId())->fPreferHeaderAndIDs = fAnnounceUsingCMPCTBLOCK;
+            if (!State(pfrom->GetId())->fSupportsDesiredCmpctVersion) {
+                if (pfrom->GetLocalServices() & NODE_WITNESS)
+                    State(pfrom->GetId())->fSupportsDesiredCmpctVersion = (nCMPCTBLOCKVersion == 2);
+                else
+                    State(pfrom->GetId())->fSupportsDesiredCmpctVersion = (nCMPCTBLOCKVersion == 1);
+            }
         }
     }
 
@@ -5258,7 +5286,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
                         nodestate->nBlocksInFlight < MAX_BLOCKS_IN_TRANSIT_PER_PEER &&
                         (!IsWitnessEnabled(chainActive.Tip(), chainparams.GetConsensus()) || State(pfrom->GetId())->fHaveWitness)) {
                         inv.type |= nFetchFlags;
-                        if (nodestate->fProvidesHeaderAndIDs && !(pfrom->GetLocalServices() & NODE_WITNESS))
+                        if (nodestate->fSupportsDesiredCmpctVersion)
                             vToFetch.push_back(CInv(MSG_CMPCT_BLOCK, inv.hash));
                         else
                             vToFetch.push_back(inv);
@@ -5386,7 +5414,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
             }
             resp.txn[i] = block.vtx[req.indexes[i]];
         }
-        pfrom->PushMessageWithFlag(SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::BLOCKTXN, resp);
+        pfrom->PushMessageWithFlag(State(pfrom->GetId())->fWantsCmpctWitness ? 0 : SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::BLOCKTXN, resp);
     }
 
 
@@ -5650,7 +5678,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
                 // We requested this block for some reason, but our mempool will probably be useless
                 // so we just grab the block via normal getdata
                 std::vector<CInv> vInv(1);
-                vInv[0] = CInv(MSG_BLOCK, cmpctblock.header.GetHash());
+                vInv[0] = CInv(MSG_BLOCK | GetFetchFlags(pfrom, pindex->pprev, chainparams.GetConsensus()), cmpctblock.header.GetHash());
                 pfrom->PushMessage(NetMsgType::GETDATA, vInv);
             }
             return true;
@@ -5662,6 +5690,12 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
 
         CNodeState *nodestate = State(pfrom->GetId());
 
+        if (IsWitnessEnabled(pindex->pprev, chainparams.GetConsensus()) && !nodestate->fSupportsDesiredCmpctVersion) {
+            // Don't bother trying to process compact blocks from v1 peers
+            // after segwit activates.
+            return true;
+        }
+
         // We want to be a bit conservative just to be extra careful about DoS
         // possibilities in compact block processing...
         if (pindex->nHeight <= chainActive.Height() + 2) {
@@ -5688,7 +5722,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
                 } else if (status == READ_STATUS_FAILED) {
                     // Duplicate txindexes, the block is now in-flight, so just request it
                     std::vector<CInv> vInv(1);
-                    vInv[0] = CInv(MSG_BLOCK, cmpctblock.header.GetHash());
+                    vInv[0] = CInv(MSG_BLOCK | GetFetchFlags(pfrom, pindex->pprev, chainparams.GetConsensus()), cmpctblock.header.GetHash());
                     pfrom->PushMessage(NetMsgType::GETDATA, vInv);
                     return true;
                 }
@@ -5715,7 +5749,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
                 // We requested this block, but its far into the future, so our
                 // mempool will probably be useless - request the block normally
                 std::vector<CInv> vInv(1);
-                vInv[0] = CInv(MSG_BLOCK, cmpctblock.header.GetHash());
+                vInv[0] = CInv(MSG_BLOCK | GetFetchFlags(pfrom, pindex->pprev, chainparams.GetConsensus()), cmpctblock.header.GetHash());
                 pfrom->PushMessage(NetMsgType::GETDATA, vInv);
                 return true;
             } else {
@@ -5757,7 +5791,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
         } else if (status == READ_STATUS_FAILED) {
             // Might have collided, fall back to getdata now :(
             std::vector<CInv> invs;
-            invs.push_back(CInv(MSG_BLOCK, resp.blockhash));
+            invs.push_back(CInv(MSG_BLOCK | GetFetchFlags(pfrom, chainActive.Tip(), chainparams.GetConsensus()), resp.blockhash));
             pfrom->PushMessage(NetMsgType::GETDATA, invs);
         } else {
             CValidationState state;
@@ -5906,7 +5940,7 @@ bool static ProcessMessage(CNode* pfrom, string strCommand, CDataStream& vRecv,
                             pindexLast->GetBlockHash().ToString(), pindexLast->nHeight);
                 }
                 if (vGetData.size() > 0) {
-                    if (nodestate->fProvidesHeaderAndIDs && vGetData.size() == 1 && mapBlocksInFlight.size() == 1 && pindexLast->pprev->IsValid(BLOCK_VALID_CHAIN) && !(pfrom->GetLocalServices() & NODE_WITNESS)) {
+                    if (nodestate->fSupportsDesiredCmpctVersion && vGetData.size() == 1 && mapBlocksInFlight.size() == 1 && pindexLast->pprev->IsValid(BLOCK_VALID_CHAIN)) {
                         // We seem to be rather well-synced, so it appears pfrom was the first to provide us
                         // with this block! Let's get them to announce using compact blocks in the future.
                         MaybeSetPeerAsAnnouncingHeaderAndIDs(nodestate, pfrom, connman);
@@ -6536,8 +6570,8 @@ bool SendMessages(CNode* pto, CConnman& connman)
                     //TODO: Shouldn't need to reload block from disk, but requires refactor
                     CBlock block;
                     assert(ReadBlockFromDisk(block, pBestIndex, consensusParams));
-                    CBlockHeaderAndShortTxIDs cmpctblock(block);
-                    pto->PushMessageWithFlag(SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::CMPCTBLOCK, cmpctblock);
+                    CBlockHeaderAndShortTxIDs cmpctblock(block, state.fWantsCmpctWitness);
+                    pto->PushMessageWithFlag(state.fWantsCmpctWitness ? 0 : SERIALIZE_TRANSACTION_NO_WITNESS, NetMsgType::CMPCTBLOCK, cmpctblock);
                     state.pindexBestHeaderSent = pBestIndex;
                 } else if (state.fPreferHeaders) {
                     if (vHeaders.size() > 1) {
diff --git a/src/test/blockencodings_tests.cpp b/src/test/blockencodings_tests.cpp
index d2392cfb22..7530b013bd 100644
--- a/src/test/blockencodings_tests.cpp
+++ b/src/test/blockencodings_tests.cpp
@@ -64,7 +64,7 @@ BOOST_AUTO_TEST_CASE(SimpleRoundTripTest)
 
     // Do a simple ShortTxIDs RT
     {
-        CBlockHeaderAndShortTxIDs shortIDs(block);
+        CBlockHeaderAndShortTxIDs shortIDs(block, true);
 
         CDataStream stream(SER_NETWORK, PROTOCOL_VERSION);
         stream << shortIDs;
@@ -116,7 +116,7 @@ public:
         stream >> *this;
     }
     TestHeaderAndShortIDs(const CBlock& block) :
-        TestHeaderAndShortIDs(CBlockHeaderAndShortTxIDs(block)) {}
+        TestHeaderAndShortIDs(CBlockHeaderAndShortTxIDs(block, true)) {}
 
     uint64_t GetShortID(const uint256& txhash) const {
         CDataStream stream(SER_NETWORK, PROTOCOL_VERSION);
@@ -267,7 +267,7 @@ BOOST_AUTO_TEST_CASE(EmptyBlockRoundTripTest)
 
     // Test simple header round-trip with only coinbase
     {
-        CBlockHeaderAndShortTxIDs shortIDs(block);
+        CBlockHeaderAndShortTxIDs shortIDs(block, false);
 
         CDataStream stream(SER_NETWORK, PROTOCOL_VERSION);
         stream << shortIDs;
diff --git a/src/txmempool.cpp b/src/txmempool.cpp
index 3586123d3e..15fa6fbca3 100644
--- a/src/txmempool.cpp
+++ b/src/txmempool.cpp
@@ -444,7 +444,7 @@ bool CTxMemPool::addUnchecked(const uint256& hash, const CTxMemPoolEntry &entry,
     totalTxSize += entry.GetTxSize();
     minerPolicyEstimator->processTransaction(entry, fCurrentEstimate);
 
-    vTxHashes.emplace_back(hash, newit);
+    vTxHashes.emplace_back(tx.GetWitnessHash(), newit);
     newit->vTxHashesIdx = vTxHashes.size() - 1;
 
     return true;
diff --git a/src/txmempool.h b/src/txmempool.h
index 6f67dd91d6..941644b2b2 100644
--- a/src/txmempool.h
+++ b/src/txmempool.h
@@ -465,7 +465,7 @@ public:
     indexed_transaction_set mapTx;
 
     typedef indexed_transaction_set::nth_index<0>::type::iterator txiter;
-    std::vector<std::pair<uint256, txiter> > vTxHashes; //!< All tx hashes/entries in mapTx, in random order
+    std::vector<std::pair<uint256, txiter> > vTxHashes; //!< All tx witness hashes/entries in mapTx, in random order
 
     struct CompareIteratorByHash {
         bool operator()(const txiter &a, const txiter &b) const {