Cryptography plays an important part in cryptocurrency. This is what keeps data secured in an open and public network that uses a blockchain it is essential in keeping data secure and immutable so that it cannot be tampered with. The software uses encryption techniques to protect Bitcoin user accounts with the use of public key cryptography. This is a key system that requires the use of a pair of keys that authorize user access to their Bitcoin. Only a user with a valid private key can access their Bitcoin from their digital wallet. The user also has a public key which is generated from the private key. The public key creates a public address that allows a user to receive Bitcoin.
Introduction To Asymmetric Cryptography
This key system is called asymmetric cryptography. This ensures that only the rightful owner of Bitcoins with a private key can use them that is linked to a public address (i.e. BItcoin wallet address). A private key is used for authorizing the access to spend Bitcoins using a digital signature. Bitcoin uses an ECDSA (Elliptic Curve Digital Signature Algorithm) type of signature for signing messages or encrypting and verifying data.
The signature occupies a space in the Bitcoin block to verify a transaction. The Bitcoin protocol normally signs each transaction with a user’s signature. This consumes more storage space, thus making it less efficient for processing transactions. There is a technique that can be used to resolve this issue.
Schnorr Signatures
An alternative to using ECDSA is to replace it with signatures ). This can summarize and confirm a user’s transactions using a single signature. This frees up more space in a block to fit more transactions. A BItcoin transaction consists of several parts, even if it originates from a single user. Each part of the transaction stores data like the outputs spent from previous transactions. These outputs would normally require a signature each. The problem with this design is that the signatures can consume up to 65% of the space inside a block.
On average it takes 10 minutes to produce a block of Bitcoin transactions (depends on how busy the network is). The original Bitcoin block design was limited to 1 MB which can hold only a certain amount of transactions. This could only process between 3 to 7 TPS (transactions per second). The transaction velocity can be increased if more transactions can be added to a block. This can be done by summarizing the transaction with just one signature. The space that would otherwise be occupied by signatures can be allocated for more transactions.
Schnorr can also provide more privacy for users. One feature is that it can hide the use of multiple signatures in transactions. This obscures the addresses from being revealed or showing the transaction has multiple signatures. Another feature is called coinjoinCoinjoin hides the sender and recipient of a transaction by mixing it up with other transactions. This makes it more difficult to identify who are the senders and receivers of a transaction.
Conclusion
Implementing Schnorr signatures for Bitcoin aims to increase the number of transactions that can be processed in a block. The transaction can be summarized using a single signature for a user to save space for more transactions. A similar scheme called has already been implemented, but Schnorr is an on-chain solution while the former uses a Layer 2 or off-chain solution.
Schnorr signatures offer an optimization technique for scaling Bitcoin transactions with privacy features. It has been estimated that Schnorr can increase Bitcoin performance capacity by up to 30%. That would minimize congestion on the network and make Bitcoin more capable of meeting high volume transaction demands.
(Photo Thumbnail Credit by Andrea Piacquadio
