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More efficient and and privacy-minded Bitcoin may enter the blockchain

Schnorr signatures and Taproot protocol to be voted on.

27.Jan.20 9:28 AM
By Abigail Richards


More efficient and and privacy-minded Bitcoin may enter the blockchain

Schnorr signatures: more efficient and more private

Bitcoin transactions are signed with digital signatures. Schnorr signatures are also digital signatures, but more efficient and more privacy-oriented. The idea at Schnorr is that every transaction gets the same signature. This is how every transaction looks the same. That is first and foremost good for your privacy. With bitcoin, for example, it is possible to send a transaction with a multisig wallet. Multisig literally means multiple signatures. You then divide the management of your bitcoin wallet among different people, for example you and your partner. Previously you saw a transaction with two different signatures on the blockchain. With Schnorr, these signatures have been brought together into one signature. You see no difference with another type of transaction. In addition, Schnorr signatures ensure that more bitcoin transactions fit in a block. That's because signatures also cost data. According to estimates, with Schnorr 25 percent to 30 percent more transactions fit in a block. Schnorr therefore also ensures that on average more bitcoin transactions can be processed per second.

Taproot, smart contracts on bitcoin

With bitcoin it is possible to perform smart contracts. A smart contract is an application that automatically performs a task when certain conditions are met. A multisig wallet that we just mentioned is an example of such a smart contract: "Only send a transaction when two people sign." But these smart contracts are publicly visible when they are executed. And that is not good for your privacy. Taproot solves this, even the most complex smart contracts will soon look like ordinary bitcoin transactions. You can no longer find information about the operation and conditions of a smart contract. Taproot works with a technique called MAST, a way to cryptographically encrypt data with hashes. Every condition of a smart contract is encrypted. In the end, it can only be seen that all conditions are met, but not which conditions. Only the sender and the receiver know that. Taproot, MAST and Schnorr therefore ensure more efficiency and privacy on the bitcoin network. More transactions fit in a bitcoin block, and more data is kept hidden at the same time.

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