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Soon, Bitcoin's long-awaited Taproot update will see the light and Blockstream engineers are already working on a new scheme to improve multi-signature transactions, i.e. those transactions that require signatures from more than one private key to authorize expenses. . Additionally, Blockstream aims to foster the privacy of Lightning Network users and improve threshold signatures.
Implemented a new multi-signature design
The Taproot update implements Schnorr signatures in Bitcoin's core code, a cryptographic signature scheme that will make it easier to create and execute smart contracts on the network.
Blockstream engineers Jonas Nick and Tim Ruffing unveiled a new multi-signature design that would reduce the technical complexity of multi-signature transactions in a way that also manages to preserve privacy.
Nick and Ruffing, along with French National Security Agency member Yannick Seurin, have published a cryptographic e-journal about the MuSig2 project which is currently under peer-to-peer review.
"Non-interactive signature"
MuSig2 combines the strengths of the two main multi-signature designs without compromising. Bitcoin's oldest multi-sig trick, the 'CHECKMULTISIG' OP code, for example, requires fewer communications from the signers of a multi-sig transaction but is less private than the MuSig1 multi-signature scheme, which improves the privacy of the 'user at the expense of adding additional steps to the signing process.
Specifically, MuSig1 requires the parties in a multi-signature transaction to communicate in multiple rounds to approve a transaction. MuSig2 would retain all of MuSig1's privacy guarantees but only require two rounds of communication between signatories to approve a transaction (e.g. Andrea generates a 2-of-3 multi-signature transaction which she sends to Bianca for approval; Bianca signs the transaction, sends it, returns to Andrea and the transaction is approved).
“It offers the same functionality and security as MuSig1 but eliminates almost all interactions between signers. With MuSig2, signers only need two rounds of communication to create a signature, and best of all, one of these rounds can be pre-processed before signers know the message they want signed, ”explains the post.
Improve privacy
In addition to improving general multi-signature wallets, MuSig2 could foster the privacy of the Lightning Network and improve so-called threshold signatures that are often used by exchanges and cryptocurrency holders for storing funds.
If Taproot is adopted in the coming months, Blockstream will replace the MuSig1 standard with MuSig2 in a code library for Schnorr signature schemes. The post also suggests that Blockstream's Liquid sidechain could run Taproot code early to test the multi-signature scheme before it's ready for distribution on the main Bitcoin network.
