ECDSA has been the preferred signature algorithm for most blockchain networks for verifying ownership and transfer of assets on the networks. However, this complex scheme that has been used in Bitcoin since 2008 started to show its limits. For example difficulties in producing multisignatures and added complexity in second layer Bitcoin networks like Lightning and crhoss-chain atomic swaps. Last year, a proposal called MuSig, or MultiSignature Scheme, was made. It offers many improvements over ECDSA and is probably one the most important cryptographic improvements to Bitcoin that would help increase privacy and efficiency in transactions.
Andrew Poelstra, one of the key researchers and co-author of the paper published a technical overview on this upcoming cryptographic scheme and its applications.
What do you think about implementing Confidential Transactions in extension blocks? CT transactions go from extension block to extension block passing through normal blocks. It looks the perfect solution:
Soft fork: old nodes see CT transactions as “sendtoany” transactions
Safe: if there is a software bug in CT it’s impossible to create new coins because the coins move from normal block to normal block as public transactions
Legal: Exchanges can use public transactions so regulators can monitor their activity
Capacity increase: the CT signature is stored in the extension block, so CT transactions increase the maximum number of transactions per block
ZmnSCPxj agreed that capacity increase can boost network capacity for all full nodes, he thinks extension blocks are not real soft forks but rather “evil” soft forks as older nodes have to upgrade in order to function optimally, which makes extension blocks worse than soft forks.