[2017-12-29] Schnorr Signatures Might Be Bitcoin's Next Step Forward

[Terraformer]

The Schnorr signatures algorithm promises to help to address one of the most pressing problems affecting Bitcoin today: scalability. Additionally, Schnorr signatures could help protect Bitcoin from certain types of spam attacks.

SCHNORR SIGNATURES COULD SOLVE BITCOIN’S SCALABILITY PROBLEM

An array of new technologies and schemes are being proposed that could help address Bitcoin’s scalability problem, such as Segwit, Lightning Network, and Schnorr signatures.

For example, many view the Schnorr signatures algorithm as a simple way of structuring digital signatures that could significantly improve the efficiency of validating a Bitcoin transaction, and it could offer new multi-signature (multisig) modes.

In this regard, Sam Wouters, Bitcoin and Blockchain speaker, wrote an article entitled Why Schnorr Signatures Will Help Solve Two of Bitcoin’s Biggest Problems Today. In it, he explains how the Schnorr signatures protocol could help solve Bitcoin’s scalability problem and how it could defend Bitcoin from certain types of spam attacks.

Wouters wrote this article in July 2017. Now, however, the article is gaining renewed traction on social media.

Valid Bitcoin transactions require signatures. These signatures occupy critical block space. This situation deteriorates when multiple addresses are involved in a transaction because each address needs its own signature. As a result, transaction size requirements increases, which in turn pushes transaction fees higher.

A potential solution would be implementing the Schnorr signatures algorithm. Wouters writes:

"At the end of the day, if it is just one person sending that transaction from multiple sources, there should be some way to do so with just one signature, right? This is what Schnorr signatures allow us to do."

Wouters estimates that “this upgrade would reduce the use of storage and bandwidth by at least 25%. To point out the obvious: that is a huge efficiency gain.”

SCHNORR SIGNATURES TO SHIELD BITCOIN AGAINST SPAM ATTACKERS

Schnorr signatures could also help prevent certain types spam attacks, such as those in which the attacker sends transactions that include multiple signatures. The attacker achieves this spam attack by repeatedly sending transactions from several sources. In this regard, Wouters writes:

"Fortunately for us, Schnorr signatures would help combat this kind of spam attack. If we only have one signature per transaction, more transactions will fit into blocks and a spammer would need to send far more transactions in competition with more people, and thus likely spend more money to take up the same transaction space."

ADVANTAGES OF SCHNORR SIGNATURES

The Schnorr signatures algorithm is compatible with multi-signatures (multsig). This functionality allows compiling several digital signatures into one signature. An article entitled Technology Roadmap – Schnorr Signatures and Signature Aggregation, points out some of the advantages of Schnorr signatures:

-Constant-size signatures irrespective of the number of participants in the multisig setup.
-The diminished size of data to be validated and transmitted across the network also translates into interesting capacity gains.
-From a privacy standpoint, Schnorr allows the entire policy of the multisig to be obscured and indistinguishable from a conventional single pubkey.
-The properties of Schnorr allowing for the combination of multiple signatures over a single input are also applicable to the aggregation of multiple inputs for all transactions.

Moreover, during a presentation at Scaling Bitcoin 2016 Milan, Pieter Wuille summarized several of Schnorr signatures advantages, as shown in the slide below:

Cryptocurrency enthusiasts agree that Bitcoin must soon solve its problems with scalability and high transaction fees. Therefore, proposals that could address these issues, such as Schnorr signatures, should undergo careful review. Promising proposals should then receive support from all stakeholders to move forward.

http://bitcoinist.com/tech-investor-believes-2018-year-legitimizes-bitcoin/

[buwaytress]

First time I've read about this tech, but then I already know I'm really lagging behind when it comes to finding out about new tech, particularly scaling solutions or upgrades for the Bitcoin network. Anyone care to weigh in on a few others? Are we aware of any that are being considered or tested? I know Litecoin has been the testing ground so far for at least SegWit and Lightning Network, how formal is this relationship, or how informal?

I wonder if the time between testing and implementation can be reduced now that there are (fewer) forking threats to destabilise the community. If 2018 is going to be the year we get the existing SW and LN implementations for major wallets and services, it may need further developments lined up just to keep managing all the new users flooding in.

[hatshepsut93]

SCHNORR SIGNATURES COULD SOLVE BITCOIN’S SCALABILITY PROBLEM

This is kinda misleading, scalability means the ability to support all the pontential users, which is billions of people in our case. Even with Lightning network it wouldn't be possible immediately, and Schnorr signatures would result in merely a 20-25% capacity increase for blocks, so it's wrong to call it "scalability solver". However, this technology is very important in the long run, because block space is a very scarce resource and we need to optimize it's usage as much as possible. Also, this article hasn't mentioned one of the most interesting application of Schnorr signatures - privacy, as this technology would make CoinJoin implementations easier.

[Hell-raiser]

SCHNORR SIGNATURES COULD SOLVE BITCOIN’S SCALABILITY PROBLEM

This is kinda misleading, scalability means the ability to support all the pontential users, which is billions of people in our case. Even with Lightning network it wouldn't be possible immediately, and Schnorr signatures would result in merely a 20-25% capacity increase for blocks, so it's wrong to call it "scalability solver". However, this technology is very important in the long run, because block space is a very scarce resource and we need to optimize it's usage as much as possible. Also, this article hasn't mentioned one of the most interesting application of Schnorr signatures - privacy, as this technology would make CoinJoin implementations easier.

Even if it is as good as it sounds, how likely is it that these proposals are going to be accepted soon? Having seen how long it took to activate SegWit and how much drama it caused, I'm not very enthusiastic that these improvements will be implemented in the near future even if they shouldn't radically change the existing Bitcoin infrastructure. I mean wallets, mining software, and whatnot. Won't miners lay themselves out to prevent all these beautiful and useful things from happening?

Lightening Network has been in the works for years now, but it may still be years till we see it in Bitcoin finally.

[maxxdxx]

Is it me or does "Next step forward" sound wrong. Its just a potential protocol upgrade. There is no reason to hype it. Also bitcoin doesn't move in steps. Its in perpetual motion. 25% is not a huge gain. Right now there are over 100.000 unconfirmed transactions and fees are huge. More like 1000% improvement is needed.

[vit05]

So, it will essentially make the blocks weigh less? Wasn't segwit already doing that? Do we really need put more stuff in small blocks?

Bitcoin need more debates and proposals but I do not think small changes like that should be seen as a solution for scalability. Bitcoin is not even used right now so it doesn't need a solution for what is now. It needs solution for what it will become in the next 5 years.

[richardsNY]

Is it me or does "Next step forward" sound wrong. Its just a potential protocol upgrade. There is no reason to hype it.

I fully agree here. It's like they are putting everything under major observation because it potentially may end up being a helpful implementation for whatever crypto coin. If we go from there, they can probably name up several other algorithmic implementations that might or might not be helpful to Bitcoin. I am glad that the developers don't let themselves get distracted with all this nonsense being pumped into the net. People quite often blame the core devs for being far too conservative, but that for me is a fantastic characteristic. Bitcoin isn't a coin that you can experiment with without any consequences, and that's something people don't seem to get....

[AK47-]

BTC's biggest flaw isn't scalability, transaction fee or anything else. Ironically, it's strength of decentralization is also it's weakness in a way. For any innovation to be implemented all the stakeholders have to be in agreement including developers, miners, businesses and users. And that is a monumental task in itself. Point in case, SegWit being implemented after a year of testing and other innovations like CoinJoin & others in line before Schnorr signatures. This is the reason BTC cash split from BTC. This is biggest problem in from of BTC right now; essentially preventing it from being future proof.

[hatshepsut93]

BTC's biggest flaw isn't scalability, transaction fee or anything else. Ironically, it's strength of decentralization is also it's weakness in a way. For any innovation to be implemented all the stakeholders have to be in agreement including developers, miners, businesses and users. And that is a monumental task in itself. Point in case, SegWit being implemented after a year of testing and other innovations like CoinJoin & others in line before Schnorr signatures. This is the reason BTC cash split from BTC. This is biggest problem in from of BTC right now; essentially preventing it from being future proof.

SegWit was hard to activate because it was disabling ASICBOOST, and there was a lot of drama around bigger blocks, because miners and businesses wanted at least 8 MB instead of SegWit's 4 MB. But historically most of the previous soft and hard forks were activated without major issues, you can check the detailed list here: https://blog.bitmex.com/bitcoins-consensus-forks/

However, the situation now is very interesting, because now miners like Bitmain have their own creation called Bcash, and it may be in their interest to damage Bitcoin to increase profitability of their coin, so they might block improvements like Schnorr signatures for some time. It's hard to predict such scenarios, because we don't know what coin is ultimately more valuable for them - Bitcoin or Bcash.