So, I was looking into Schnorr signatures with the Taproot upgrade and found out that they allow multiple signatures in a multiSig transaction to be combined into one. This is cool because it can lower the size of transactions and, hopefully, cut down on fees.
But that's not all. What really caught my eye is how Schnorr signatures might boost privacy. They can make multi-signature transactions appear like they’re just regular single signature ones. This means it gets a lot trickier to track or separate these transactions during blockchain analysis, which is a win for privacy.
Given this basic idea, do you think that as Schnorr signatures develop, we might not even need mixers anymore to keep our privacy intact?
Schnorr signatures and privacy issues
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hodler_b34rFull Member
Posts: 121 · Reputation: 453
#2Aug 18, 2020, 11:38 PM
I can not explain it for you by myself but hopefully this thread of HusnaQA can help you.
[Education] Bitcoin Privacy and Anonymity
➥ 11. Schnorr Signature
You cannot retrieve a public key of the address from a Schnorr-signed transaction, and also you can't infer the type of script being ran in a transaction spending Taproot outputs, because those are hashed (i.e. hidden) before being broadcasted to the blockchain. That's how Schnorr improves privacy.
The 'multisig transactions look like single-sig' you're talking about is the result of the transaction using a Tapscript instead of plainly storing them in the ScriptPubKey.
Schnorr signatures will not prevent blockchain analysis from finding out that you are moving coins from address A to address B. These two technologies are on two different layers of privacy.
quantumbearHero Member
Posts: 411 · Reputation: 2212
#4Aug 19, 2020, 03:52 AM
He is not talking about now but if Taproot can be developed into acting as something like a mixer in the future. I have read in the past that bitcoin developers can make Taproot transactions to like coinjoin. But I do not think this is what the developers want it to be. Even it is developed in a way that only singlesig wallets are having Taproot wallets, instead for the developers to make Taproot multisig wallets which will still have the same fee. I do not know why Taproot should have being for singlesig instead of multisig when the multisig will still function like singlesig with same transaction fee.
What you are talking about (coinjoin, mixer) is a different approach to what Taproot is trying to do.
Taproot is trying to (eventually on a large scale) support multiple parties sending their own coins using the same address.
Whereas Coinjoins are when you take multiple normal addresses and make many of them inputs and outputs.
Commercial software already recognizes most kinds of coinjoins and considers them to be of the 'mixer' category. It would be different for Taproot as everything would be encoded in one transaction but said transaction would have to be created with special software since none of the existing wallets such as Core, Sparrow support that yet (without jumping through hoops).
In the context of mixers, because of the few number of software that is capable of creating them, these sort of taproot transactions can easily be fingerprinted to a particular wallet and possibly even OS version if it is not cross-platform.
I guess Taproot multisig sort of acts like a good mixer for now, but only because it's not being used widely so BA hasn't bothered to update its rule engines for it. That also means that unlike coinjoin, you're going to have a hard time finding strangers for doing a multisig taproot transaction. Unless somebody updates Joinmarket to support this kind of mode I guess.
Ok, this is where I got it wrong. I'm learning and asking, sometimes my questions may appear dumb. But I know the forum and its members can accommodate.
To be fair, Schnorr and Mixers can be complementary. Using the two of them may provide you with enough privacy but as explained Schnorr does not obscure the path from where your funds were sent to where it will be received. But hiding multisig into one and using a mixer may make it harder to analyze or trace the path of your funds.
Since Schnorr also helps to reduce transaction size, your fee when using mixers might be reduced as well. However using them both should allow you to consider a few things such as convenience and regulatory compliance. So use at your own risk.
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