Very soon, the bitcoin blockchain will receive the most important update from the release of SegWit. It’s about Schnorr, whose main idea is to reduce the size of the bitcoin transaction data by implementing multi-signatures.
The mathematical scheme developed by Klaus Peter Schnorr connects private and public keys with signatures:
- The public key is your unique bitcoin address, which is used in the chain of blocks. Everyone on the network can see it. It is a string of letters and numbers generated on the basis of a private key.
- A private key is a number that is encoded in different formats, depending on which wallet you use. In each format, the private key looks like a set of randomly generated numbers and symbols.
Shnorr’s multi-signatures suggest grouping of signatures instead of having several separate signatures. And this directly affects the amount of commission for the transaction:
- Signature information increases the size of the transaction. Therefore, this increases the commission fee for the transaction.
- Users have to pay for a place that could be used for other transactions.
Also, the place on the detachment will be freed thanks to multi-signatures. This will allow the system to process more records. Grouped data will be processed faster than small blocks.
Shnorr could not be applied to the bitcoin blockchain before the introduction of SegWit in August last year. ECDSA, a digital signature scheme, is used to sign Bitcoin transactions. Its replacement required a hard fork. Now soft fork will be enough for the introduction of Schnorr. Developers do not need to reset the history of the bitcoin blockchain to carry out the update.
Why it is important
- Previously, for each transaction, a unique signature was required, but now you can use one signature for different participants in the transaction confirmation. 1. Schnorr for a quarter will save space in the bitcoin block and will increase the network bandwidth by 20-25%. 1. Safety will also increase at the same time. At least two parties must confirm the transaction for processing with a multi-signature system. This limits the possible actions of intruders when trying to perform a transaction from someone else’s account. 1. Grouping data from different sources increases privacy and makes it difficult to find the source of each transaction.