What are Schnorr Signatures?

Bitcoin transactions rely on digital signatures to prove ownership of coins and authorize their transfer. Every time a transaction happens, the sender must sign it cryptographically, ensuring that only the rightful owner can spend the funds.

Since Bitcoin’s inception, it has used the Elliptic Curve Digital Signature Algorithm (ECDSA) for this purpose. However, with the Taproot upgrade, Bitcoin has introduced Schnorr signatures, an alternative cryptographic signature scheme with numerous advantages.

Why did Bitcoin use ECDSA instead of Schnorr?

When Bitcoin was created in 2008, Schnorr signatures were under patent protection, preventing them from being freely used. Instead, Satoshi Nakamoto chose ECDSA, an open-source, widely tested digital signature algorithm that was already implemented in OpenSSL, which made the integration into Bitcoin easier.

However, ECDSA has limitations, especially when it comes to privacy, efficiency, and scalability. With the Schnorr patent expiring in 2008, developers finally had the opportunity to improve Bitcoin’s cryptographic framework.

The Advantages

1. Key and Signature Aggregation

In traditional multisig transactions, every participant must provide their own public key and individual signature. This makes the transaction size larger and more expensive, as every signature must be verified separately.

Schnorr signatures allow key aggregation, meaning multiple parties can combine their public keys into one.

Smaller transactions → Lower fees

Faster verification → Less computational power needed

Better scalability → More efficient block space usage

Additionally, this makes multisig transactions indistinguishable from single-signature transactions. That enhances the privacy on the Bitcoin blockchain.

2. Enhanced Privacy and Fungibility

Schnorr signatures improve Bitcoin’s privacy by making complex transactions look identical to regular transactions.

With ECDSA, blockchain surveillance firms can often differentiate between:

• Single-signature transactions
• Multisig transactions
• Lightning Channel opening or closing transactions This allows chain analysis companies to track user activity. However, with Schnorr signatures, all transactions appear identical, breaking heuristics used to spy on Bitcoin users.

For privacy-conscious users, Schnorr is a massive step forward.

3. Batch Verification

Every Bitcoin block contains hundreds or thousands of signatures, all of which must be verified by nodes. With ECDSA, each signature is checked one by one, consuming processing power and slowing down validation.

Schnorr introduces batch verification, meaning a node can verify many Schnorr signatures at once instead of individually.

→ Faster block validation

→ More efficient network processing

→ Reduced computational requirements for full nodes

4. More secure Cryptography

Schnorr signatures are provably more secure than ECDSA because they are mathematically simpler and avoid certain vulnerabilities.

For example, ECDSA is vulnerable to signature malleability, which could be exploited to manipulate unconfirmed transactions. While SegWit helped mitigate this issue, Schnorr signatures completely eliminate this risk.

Final Thoughts

• Schnorr signatures improve Bitcoin’s privacy, efficiency, and scalability.
• They eliminate blockchain analysis heuristics, making transactions more private.