How is Schnorr Signatures helping solve Bitcoin scalability problem

 

One thing that Bitcoin fans hate about it is “Scalability.”

Bitcoin Scalability problem is a real concern that is bothering the community. The size of each block on a bitcoin network governs how much transactional data can be confined in it. And with ever-increasing bitcoin user base [As per statista reports the number of Bitcoin enthusiast are 16.95 million  as in March 2018], it is affecting the transaction processing capacity of the bitcoin network that on an average takes 10 minutes to create a new block, and  it can manage seven transactions per second [TPS] that costs around 2-10 USD+ .

If you compare this with other cryptocurrencies, they boast having a better TPS.

Cryptocurrency Transaction Speed
Cryptocurrency Transaction Speed

But as Bitcoin is most loved cryptocurrency, and has a market cap of $144,982,960,328, experts need to find a solution to Bitcoin scalability problem.

Tried and Proposed Solution to Bitcoin Scalability Problem

How could you probably solve the Scalability issue that is an inbuilt feature of Bitcoin?

Increase the Block size

Yes, the Bitcoin community in 2017 was keen to resolve Scalability issue and started working on 2MB block size increase. The project BIP 100 and BIP 101 where BIP stands for Bitcoin Improvement Proposal was initiated into two phases

  1. Segwit– Segregated Witness (SegWit) to separate signatures from transaction data, effectively allowing the network to “cheat” by creating larger blocks than 1 MB, yet still counting them as being below the cap. While Segwit received of only 30% miners, Segwit2x found its way in August 2017. As per cointelegraph – Segwit was launched to get rid of transaction malleability required moving some non-critical data, called “witness data,” out of transactions and off the Blockchain. This allows for an increase in the block sizes of up to 4MB, although most experts close to the development process say that the network is most likely to settle at about 2MB block sizes after SegWit is launched.
  2. 2MB block size increase – The phase had to be suspended because the community did not agree, maybe because it would lead to a higher transaction cost.

Even though the Blocksize increase did not happen, there are potential pros and cons of this approach

Pros of Increasing Block size to 2MB

  1. By increasing the size, the Bitcoin community is making space for new users, that could mean more adoption of Bitcoin at the global
  2. Large Blocksize results in more transactions that lead to more fees involved per block. So as the base block prize decreases, more fees would attract dedicated miners thereby making network secured

Cons of Increasing Block size to 2MB

  1. Large Blocks means slow movement of data, however, with faster internet speed, this could be kept
  2. The Unspent Transaction Outputs or UTXO, the database would increase rapidly as a result of the higher transaction cap. As per a stat of 2015, the UTXO size has doubled in the last year, and we are witnessing the UTXO growth to out space new memory chip technology. That means an issue for nodes which cannot increase their capacity and may drop off.

The Lightning Network

First proposed by Joseph Poon and Tadge, aka Thaddeus Dryja in 2015 in this white paper, it works like this. For example, two parties say A and B and transacting,

A —————————->B [ A gives B 50 $]

B—————————–> A [ B gives A 5 $]

A——————————>B[ A gives 15 $]

Then rather than broadcasting each recurring transaction, a net settlement at a later date could be published on chain network.

In Bitcoin’s case, it allows for things like micropayments that are entirely handled off-chain and then settled at some point on the chain, cutting down on the number of transactions sent while still allowing full utility and fund control. So it’s about creating a micropayment channel to enhance scalability thereby reducing on chain transactions. Sending many payments inside a given micropayment channel enables one to send large amounts of funds to another party in a decentralized manner.

Pros of The Lightning Network

  1. Due to reduced spamming, the transaction fees are diminished.
  2. As the network scales, it would help in increasing the number of transactions

Cons of The Lightning Network

  1. The blockchain is all about transparency, and as there would be off chain transaction, it questions the use of a blockchain network.
  2. As less transaction flow on a chain, the Bitcoin community that is fee-driven and finds incentive and keeps it secured via mining may find it hard to mine the blocks.

Schnorr Signature

We all know that to perform any successful transaction on a bitcoin network digital signatures are required. Now considering the above example [under lightning network A transacting with B], for three transactions, the signature needs to be included that needs some space on the block and for using that space the individual need to pay miners.

Just imagine this signature floating around a network using space and you paying for it. Seems redundant?

That’s where Schnorr Signature is handy

What is Schnorr Signature?

A new Schnorr-based multi-signature scheme, i.e., a protocol which allows a group of signers to produce a short, joint signature on a common message called MuSig.

So basically, you would still sign the transaction however with Schnorr signature scheme it would apply a series of mathematical rules that link the private key, public key and signature together, thereby freeing space and lowering fees.

According to developers working on the technology, the change would lead to an estimated 25 percent to 30 percent boost in bitcoin’s transaction capacity.

Pros of Schnorr Signature

  1. Increase in Capacity– The Schnorr signature that works on the principle of multisignature aggregation offers data advantage. With only one signature being transmitted, included in the block thereby resulting in more rooms for newer transactions. Yes Segwit also helps in segregating the signature part, but here is the comparison done by the Bitcoin Core groups

For example: 

Segregated Witness, as proposed by Bitcoin Core, offers a (roughly) 75 percent discount on all data included in the witness rather than the original block. One megabyte of witness data is, therefore “weighed” as .25 megabyte, which would leave room for .75 megabyte transaction data in the original block, for a total of 1 megabyte. 

If aggregated Schnorr signatures reduce the total size of witness data, say from 1 megabyte to .5 megabyte, this .5 megabyte would then be discounted to 0.125 megabytes, leaving room for up to 0.875 megabytes in the original block. (A capacity increase of about 17 percent.)

 The exact amount of added room depends on the types of transactions included in blocks. But rough estimates by Bitcoin Core developer Eric Lombrozo suggest that Schnorr signatures could eventually increase total capacity 40 percent or more – that’s on top of the added 60 to 100 percent already offered by Segregated Witness.

  1. Enhanced Privacy – As the basic idea of Schnorr Signature work is that it allows multiple inputs to result in one transaction, controlled by the same Now you could switch between devices or people and still make a transaction as the Schnorr Signature allows you to craft a signature same as any other one.

The Cons of Schnorr Signatures are not yet clear for the apparent reason that the scheme is, however, to be implemented and tested. But with its key features and reg the scalability of Bitcoin, it seems a more viable solution of all the proposed solution in the near future.

We would love to hear your thoughts about Schnorr Signatures. Feel free to post your feedback here.


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

References: Wikipedia Coinbuzz, Lightning Network, CrushtheStreet, Cointelegraph, Medium

Coinbase gets approval to list Coins deemed Securities

Coinbase said it got the green light from U.S. watchdogs to move forward with a trio of acquisitions that will allow it to become one of the first federally regulated venues for trading digital coins deemed to be securities. Last month, Coinbase acquired Keystone Capital, a California-based FINRA-registered broker-dealer that operates as an alternative trading system.

With permission to trade tokenized securities, Coinbase users could soon have the ability to move beyond the limited cryptocurrency options currently available to be traded on the site’s central exchange which currently just lists Bitcoin, Bitcoin Cash, Ethereum and Litecoin. The company announced last week that it was exploring adding five new tokens to its exchange, including Cardano, Basic Attention Token, Stellar Lumens, Zcash and 0x.

Read more at Techcrunch


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

TenX(PAY) up by 50% in 24 hours on banking license rumours – trading @ $8 in Bithumb

WhatsApp Image 2018-07-16 at 17.07.44
$8 on Bithumb
Screen Shot 2018-07-16 at 4.09.35 PM
$1 on Bittrex

 

With the TenX(PAY) token up by almost 40% in 24 hours, rumours that are spreading say that the project might be very close to getting their banking license approved(mostly in Korea) – this will enable it to launch their own card without any hassle or dependency on a non-crypto service. The PAY token is trading on Korean exchange Bithumb at ~$8 whereas on Bittrex and the other exchanges at ~$1.

Another rumour that is going around is that it might be very close to getting listed on Binance, which will definitely give it a huge boost in volume.

Although there has been no such announcement from the TenX team on its official pages, these seem like the most plausible conclusions. Having said that, it might just be another case of pump & dump where the select few will make the buck and leave the rest drooling.


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

Bitcoin Futures Volume Spike As Cboe Awaits ETF Decision

A well-known fact that cryptocurrency and bitcoin prices are declining since last month of 2017. At one hand the spot prices have been volatile, the bitcoin future products have seen a steady increase in trade volume and more liquidity. In fact, Cboe is keen to launch a bitcoin-based exchange-traded-fund (ETF), whose fate would be decided by the US Securities Exchange Commission on August 10. The US Securities and Exchange Commission is seeking a public opinion concerning the ETF application to help their decision on whether or not they will approve a bitcoin ETF this time around. (SEC).

Read more at bitcoin


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

SIX Group, considering cryptocurrency trading, go online by mid-2019

SIX Group, the parent company of the Swiss stock exchange, announced that it had been considering cryptocurrency trading on its upcoming platform, scheduled to go online by mid-2019. They are about to launch a fully-regulated form for digital assets, which will cover a wide range of services, including consulting for ICO projects.

“With the new service we will provide a safe environment for issuing and trading digital assets, and enable the tokenization of existing securities and non-bankable assets to make previously untradeable assets tradeable,”   SIX Group spokesman Stephan Meier explained in the interview with swissinfo.

Read more at fxstreet

#LookAtMeImNaval – BTC fans mocking the writing style of the angel investor

Friday 13th was an exciting day for crypto on Twitter. A new hashtag appeared out of nowhere: #LookAtMeImNaval. How did it happen?

Well, it all started on July 1st, Mr. Ravikant tweeted that solid cryptocurrencies and tokenized decentralized applications (dApps) can coexist and become successful together,while the idea was taken up generously, it led to some controversial exchange of comments.

“Presumably, though the reason was not confirmed and this is pure speculation, it was this reference of the free rider problem which triggered the maximalists and brought out their inner trolls.

And it took 12 days until a hashtag campaign called #LookAtMeImNaval started.

Read more at cryptoglobe


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

BlackRock begins exploration of bitcoin

The $6.3tn expenditure powerhouse has designed a group from various sections of the business to look into cryptocurrencies and their underlying infrastructure, blockchain. Resources stated the group of experts is also searching at what BlackRock’s opponents are executing with cryptocurrencies and how that could impact its organization. The doing the job team will make current its conclusions to senior administration. At the time, the CEO said bitcoin and other cryptocurrencies have been “far from” remaining a prospect for institutional buyers, including that none of BlackRock’s consumers wanted to commit in it.

Read more at fnlondon


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

‘Etheremon’ Game Migrating to Zilliqa Because of Ethereum’s High Gas Prices

Etheremon, a ‘Pokemon clone’ built on the blockchain, will be switching from Ethereum to Zilliqa in light of scalability issues facing the Ethereum network. Ethereum gas price has been unpredictable due to its large user base and unethical practices by some exchanges causing network congestion and leading to slow transaction speeds and high gas prices. In their medium blog post Etheremon said:

High gas price has been an issue limiting the gaming experience of our players for so long. Over the last few days, we even observed a good gas price shoot up to 100 Gwei, making the transaction cost in Etheremon go up 100x.

Long-term solution, we are glad to announce that we will work with the Zilliqa team to explore Zilliqa as a scalability solution for Etheremon. The higher throughput and low gas of Zilliqa’s sharding solution offer players better experience.

At the time of writing this post, safe gas price is 91 GWEI. Read more at Unhashed


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

CoinBase is exploring adding Cardano, Basic Attention Token, Stellar Lumens, ZCash & 0x

Coinbase today announced that they are exploring the addition of the following assets to Coinbase: Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), 0x (ZRX).

“We are exploring the addition of several new assets, and will be working with local banks and regulators to add them in as many jurisdictions as possible. Unlike the ongoing process of adding Ethereum Classic, which is technically very similar to Ethereum, these assets will require additional exploratory work and we cannot guarantee they will be listed for trading. Furthermore, our listing process may result in some of these assets being listed solely for customers to buy and sell, without the ability to send or receive using a local wallet” Read more at The Coinbase Blog


Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.

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