Segregated Witness has entered its final testing stage before roll-out on the Bitcoin network. That is good news , most importantly because the innovation introduces a capacity increase to allow for more transactions on the network, while it also solves transaction malleability .
And, it introduces script versioning ‒ an extension to the Bitcoin protocol that allows for an entire new category of innovation.
One of these imminent innovations has been on the top of several Bitcoin developers’ wish-lists for some time: Schnorr signatures.
With the impending release of Segregated Witness, implementation of the Schnorr cryptographic signature algorithm might follow soon after, potentially improving Bitcoin’s scalability, efficiency and privacy, all in one go.
Here’s how.
Signatures
First, a brief re-cap: what are signatures?
At the heart of Bitcoin lies the mathematical trick called “public key cryptography,” a cryptographic system that uses two kinds of “keys” (really strings of numbers): private keys and public keys.A private key and a public key are mathematically linked. But while it’s very easy to produce a public key from a private key, it’s practically impossible to produce the private key from a public key. It’s a “one-way street.”In order to spend bitcoins from a particular Bitcoin address, one must prove “ownership” (or: knowledge) of the private key that refers to the public key associated with that address. And to prove ownership of a private key, without having to reveal that private key, a cryptographic signature is used.A signature is created by performing a calculation using the transaction data and the private key. And here’s where the magic of public key cryptography comes in: Knowing the public key , anyone can see if the correct private key was used to create the signature . Without ever needing to know the private key itself.The “owner” of the private key can therefore […]
