As a Bitcoin user, you’re using digital signatures along with specific messages to prove you’re the sender and that this is a legitimate command by you, the owner of the private key. These digital signatures are to show that you know the private key associated with an address without exposing your key to the network.
Bitcoin has several signature schemes, all aimed at performing different tasks. As the network matures and we use it in different ways, optimisation of how these signatures are created is desperately needed.Â
As Bitcoin continues to evolve with the launch of Taproot, developers can use these soft forks to build improved signature schemes that provide security, efficiency, and privacy for Satoshis. One such recent development is Musig1 and its improvement MuSig2, a new signature scheme that aims to enhance multi-signature transactions.Â
What are Bitcoin Multi-signature transactions?
When you send Bitcoin from one wallet to another, you’re normally using a single signature transaction because that’s all you require to move the funds.Â
While multi-signature, commonly referred to as multi-sig, refers to requiring more than one key to authorise a Bitcoin transaction. Distributed signatures are generally used to divide up responsibility for possession of Bitcoin, but also for use with communication with second-layer solutions like the Lightning Network or Liquid Network.
Bitcoin’s oldest multi-sig trick, the ‘CHECKMULTISIG’ OP-code, could be used to create these types of wallets/transactions and requires less communication from the signers of a multi-sig transaction but is less private than the MuSig1 multi-signature scheme, which improves user privacy at the expense of adding extra steps to the signing process.
What is MuSig1?
MuSig1 is a multi-signature scheme that enables multiple parties to jointly sign a single message or transaction, requiring a certain number of signatures to authorise the transaction. This enhances security and provides additional control over funds. Compared to traditional script-based multi-sig, MuSig uses less block space, but as a trade-off, it requires more interactivity between the participants.
MuSig1, based on Schnorr signatures, is a significant improvement over the traditional ECDSA-based multi-sig schemes used in Bitcoin. It allows for key aggregation, which means that a group of signers can create a single joint public key and produce a single signature for a transaction.
This process not only simplifies multi-sig transactions but also reduces the transaction size, lowering transaction fees and improving privacy.
What is MuSig2?
MuSig2 is an upgraded version of MuSig1, offering even better security, efficiency, and privacy features. Proposed by Blockstream researchers in November 2020, MuSig2 is a two-round multi-signature scheme, which means it requires only two communication rounds between signers to create a valid signature.
This improvement makes MuSig2 more practical and user-friendly, as it reduces the complexity of coordinating multiple signers.
What are the differences between MuSig1 and MuSig2?
The main differences between MuSig1 and MuSig2 are in their communication rounds and security models:
Communication Rounds
MuSig1 is a three-round multi-signature scheme requiring three communication steps between signers to create a valid signature. In contrast, MuSig2 is a two-round scheme, making it faster and more convenient for signers to coordinate their actions.
Security Models
MuSig1 relies on the Random Oracle Model (ROM) for its security proofs, which assumes the existence of an ideal hash function. However, ROM is an idealised model that might not accurately represent real-world hash functions. On the other hand, MuSig2’s security proofs are based on the Algebraic Group Model (AGM), which provides a more realistic representation of cryptographic primitives, leading to stronger security guarantees.
What will MuSig2 bring to Bitcoin?
The introduction of MuSig2 to Bitcoin will bring several benefits, including:
Improved Efficiency
MuSig2’s two-round communication model reduces the complexity of coordinating multi-sig transactions, making it faster and more convenient for users.
Enhanced Privacy
Like MuSig1, MuSig2 allows for key aggregation, which means that multi-sig transactions appear as regular single-signature transactions on the blockchain. This feature improves privacy by making it harder for third parties to identify multi-sig transactions.
Greater Flexibility
MuSig2 supports more complex signing policies, such as threshold signatures and hierarchical key structures, providing users with greater control over their funds.
Better Security
MuSig2’s security proofs in the AGM offer stronger security guarantees compared to MuSig1’s ROM-based proofs, providing a more robust foundation for multi-sig transactions.
What use cases does MuSig2 assist?
MuSig2 is particularly beneficial for use cases that require enhanced security, privacy, and efficiency. Some examples include:
Collaborative Custody
MuSig2 enables multiple parties to securely manage joint funds, such as in a trust or a joint bank account, by requiring a certain number of signatures to authorise transactions. This feature reduces the risk of a single point of failure and ensures that no single participant can unilaterally access the funds.
Cold Storage
MuSig2 can be used to create a multi-sig cold storage solution where you, as an individual, would like to split your wallet access into multiple keys instead of a single key required to access stored funds. This setup adds an extra layer of security, as it reduces the likelihood of unauthorised access due to key theft or loss.
Privacy-preserving wallets
Wallets that prioritise user privacy can implement MuSig2 to create multi-sig transactions that are indistinguishable from regular single-signature transactions. This feature helps users maintain their privacy on the blockchain without sacrificing the security and control offered by multi-sig transactions.
Layer 2 Protocol improvements
MuSig2 can be utilised in Layer 2 protocols, such as the Lightning Network, to secure off-chain transactions and improve their efficiency. By aggregating signatures, MuSig2 reduces the on-chain footprint of Layer 2 transactions, thereby reducing transaction fees for channel opens and closes, reducing blockchain bloat and making it harder for chain analysis firms to identify Lightning transactions from standard ones.
MuSig2 would also assist in streamlining the Liquid peg mechanism, making it cheaper and easier for federation members to manage their bridges. Additionally, the Liquid Network also has Taproot letting users of L-BTC use MuSig2 in production, so any innovations built on top of MuSig on the base layer can be replicated on Liquid and vice versa.Â
MultiSig improvements are a must for Bitcoin.
MuSig2 is a promising development in the world of Bitcoin, offering improved security, efficiency, and privacy features compared to its predecessor, MuSig1.
By streamlining multi-sig transactions and providing stronger security guarantees, MuSig2 has the potential to unlock new use cases and enhance existing ones, making Bitcoin more accessible and secure for users worldwide.
As the technology matures and gains adoption, we can expect MuSig2 to play a significant role in shaping the future of Bitcoin and blockchain technology.
Do your own research.
If you want to learn more about MuSig2 on Bitcoin, use this article as a jumping-off point and don’t trust what we say as the final say. Take the time to research other sources, and you can start by checking out the resources below.
