Schnorr Signatures & Bitcoin 101

Let’s try to analyze at a high level how Bitcoin transactions are structured and how Schnorr digital signatures work

As explained in the last article relating to Bitcoin and its possible future, one of the BIPs (Bitcoin Improvement Proposals) that are about to be adopted by the majority of users of the network are the Schnorr signatures. This improvement proposal is one of the most interesting ever: in addition to improving scalability and privacy, it also offers a development environment for technologies like Taproot that aim to improve transaction privacy.

Bitcoin transactions: UTXO

Bitcoin transactions have an underlying concept that is not familiar to many. While our typical bank account is based on a balance, Bitcoin uses Unspended Transaction Output (UTXO). These UTXOs are associated with a private key and are the set of transactions still to be spent. When a person makes a transaction and sends BTC they are actually transferring ownership of that UTXO by signing it with the cryptographic key.

Schorr signatures: the origin

A Schorr signature is a digital signature produced by the Schnorr signature algorithm described by the namesake Claus Schnorr. It is essentially a…