Schnorr signatures will be implemented after the activation of SegWit, and the technology will provide solutions to bitcoin’s scalability issues and afford consumers more privacy. Currently, individuals transacting with Bitcoin must send and receive messages using their public and private keys. Schnorr signatures will be used in place of private keys during normal transactions. This affords more privacy to users and lowers the transaction size of deals involving multiple parties.
Schnorr signatures will allow for the use of one signature for multiple transacting parties. This will be done by creating one combined multiple signature (MultiSig) that will be used to execute the deal. This optimizes efficiency on the blockchain. For example, if A, B, and C wanted to send money to D then each transaction (i.e., A-D, B-D, C-D) would require adding the public and private keys of the respective parties to the blockchain. Using a Schnorr MultiSig, however, would allow for one bundled transaction (i.e., ABC-D). This could reduce storage space and bandwidth by 25%. MultiSig also provides users increased privacy since it becomes difficult to determine who sent a particular amount of currency when multiple parties execute a MultiSig transaction.
Additionally, Schnorr signatures remedy spam attacks. Spam attacks occur when individuals, public or private, execute bitcoin transactions in order to use up as much transaction space as possible. They usually do this for a particular purpose (e.x., pushing people to hard fork a currency by increasing mining difficulty). Recently, some bitcoin spam attacks involved individuals sending transactions from dozens of parties to a single receiver—sometimes leading to only 78 transactions occurring in a particular block. Schnorr signatures will lower the overall number of transactions needed to be added to the blockchain, which will likely disincentivize spam attacks because the costs for carrying out the attack will significantly increase due to the more efficient use of data.
