What are Bitcoin Schnorr Signatures?

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Developers are always coming up with innovative features for the blockchain family. Final testing has begun for the Segregated Witness that increases capacity. That allows more transactions on the network, simultaneously solving transaction malleability. It introduces script versioning, a Bitcoin protocol extension, paving a way for a new category of innovations. One such innovation, eagerly awaited by many Bitcoin developers, is the Schnorr signatures. With the forthcoming release of Segregated Witness, application of the Schnorr cryptographic signature algorithm could follow soon after. It could potentially improve privacy, efficiency, and scalability of Bitcoin.

How this is possible?

Bitcoin is built around a mathematical concept called public key cryptography, a system that uses two kinds of number strings, private and public keys. They are both linking mathematically, and while it is easy to produce a public key from a private one, it is near impossible to do it vice versa. If someone wants to access a particular Bitcoin address, he must first prove the ownership of the private key linked to that address. One way of doing this, without revealing the whole private key, is using a cryptographic signature. You can create it in a calculation using the private key and the transaction data. Thus anyone knowing the public key can verify the private key without actually owning it. The owner can sign a transaction without fear of revealing the private key.

This is where the Schnorr signatures come in.

Named after its inventor Claus-Peter Schnorr, it encompasses series of mathematical rules that link together the signature with private and public keys. Many experts consider Schnorr signatures to be the best in the field. They are relatively fast to verify, offer a high level of correctness, do not suffer from malleability and support multisignature. Meaning that several signatures aggregate into a new single signature.

Why not implement it?

Schnorr has not been implemented yet because Bitcoin uses Elliptic Curve Digital Signature Algorithm (ECDSA) signature scheme. Also, it would be impossible to change it without a hard fork. That is why SegWit is so important in this context. Moreover, it is a separate part of the transaction and includes all signature data, so the old Bitcoin protocol doesn’t need adjustments. However, script versioning allows implementing changes, in our case, the signature scheme, to the witness through a soft fork.

Advantages of the Schnorr update

Arguably, the most beneficent property of Schnorr, is multisignature aggregation, allowing users to send coins from multiple addresses simultaneously. Each of these inputs requires its own unique signature to be included in the transaction and sent over the network, making multisig slow and cumbersome. Schnorr allows using just one combined signature for all the participating parties, offering an obvious advantage and freeing up more room for transactions. The exact numbers would depend on the specific transaction types included in the block. A rough estimate would be around 40 percent (on top of the 60- 100 percent already gained by the SegWit). This would also allow for much more complex smart contract constructions (two-of-three, three-of-fifteen, hundred-of-hundred etc.) using the same amount of data as for a single signature.

But wait, there is more!

Another interesting benefit Schnorr signatures can offer is incentivized privacy. A trick to improve privacy, CoinJoin, allows combining multiple transactions by different users into a single transaction. This transaction would include multiple inputs from different sources and send money to multiple outputs. Done correctly, CoinJoin would drastically improve privacy, because nobody could track which inputs paid for which outputs, making it impossible to track each individual person in the given transaction.

CoinJoin is not a new invention but up until now it was quite unpractical as those using it would automatically become suspicious. However, with Schnorr signatures, users could not only combine the transactions but signatures as well. With the added benefit of a reduced size of a transaction. Therefore, using the Schnorr algorithm would not only increase privacy, but also lower the cost for everyone involved, actually the most private option would be also the cheapest one, meaning most users will opt for it, making Bitcoin more private in the long run.

Source:

Laura Savu “SIGNCRYPTION SCHEME BASED ON SCHNORR DIGITAL SIGNATURE” University of Bucharest, Romania
Hiraku Morita, Jacob C.N. Schuldt, Takahiro Matsuda, Goichiro Hanaoka, and Tetsu Iwata “On the Security of the Schnorr Signature Scheme and DSA against Related-Key Attacks” Nagoya University, Nagoya, Japan
C.P. Schnorr “EFFICIENT IDENTIFICATION AND SIGNATURES FOR SMART CARDS” Frankfurt University
https://en.wikipedia.org/wiki/Schnorr_signature
https://en.wikipedia.org/wiki/Proof_of_knowledge
https://en.wikipedia.org/wiki/Claus_P._Schnorr
https://en.wikipedia.org/wiki/SegWit
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Soft_fork
https://docs.decred.org/research/schnorr-signatures/
https://bitcoincore.org/en/2017/03/23/schnorr-signature-aggregation/
https://github.com/sipa/bips/blob/bip-schnorr/bip-schnorr.mediawiki

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The most successful Ethereum dApps

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One reason many experts think the Ethereum network has more potential for growth than other blockchain networks are dApps (decentralized applications). Dapps are software applications that run on a network and are not controlled by a centralized authority. Much excitement arises from the potential reliability of such technology because it is secured by a blockchain, thus making it more stable and harder to manipulate. Smart contracts backed by Ether can be included in the system. Allowing it to enforce its clauses and issue cryptocurrency tokens automatically. And this means that dapps have a potential to revolutionize most of established practices and industries. Whether this potential can come to reality, depends on factors like scalability of the network, quality of applications and their adoption rate.

This is a list of Ethereum dApps currently on the market:

Let’s try to have a closer look at some of the most popular and successful of them.

IDEX

The most popular decentralized exchange is IDEX, an exchange that does not rely on a central authority to store funds and allow trades. Users can trade between themselves Ethereum based tokens like Tronix, BNB, and OmiseGo. It stands out amongst other exchanges with the capability of trading in real time. Because it does not wait for the Ethereum network to process transactions before confirmation. Instead, smart contracts are used to process and enforce transactions, queuing them for transactions on the actual network in the order they were accepted.

DNN

Decentralized News Network distributes news that are verifiable and resistant to censorships. This dApp focuses on releasing factual information and eliminates biases with the help of a decentralized community. First, the writers generate and send in news content, which is then inspected by reviewers, and then the content is available for readers. Also, on each of these three steps, users earn tokens for their actions. Readers earn by suggesting topics and by finding errors in the published content. Reviewers get tokens for approved articles, and writers earn when an article gets published. Currently, DNN has over 300 writers, over 5,000 reviewers, and over 50,000 readers.

CryptoKitties

CryptoKitties is a game that allows users to breed, trade and collect unique and irreplaceable cats represented by ERC-721 tokens. In theory, such tokens could eventually represent any real asset, such as real estate or art. However, the game has attracted a lot of attention from players, imitators, investors, and non-users thanks to its initial popularity and by jamming the entire Ethereum network. Since its peak in December, its popularity has dropped down by almost 97 percent. We can argue about how decentralized this app is, as most users access it by one internet portal and it operates from a centralized database.

LocalEthereum

LocalEthereum is a peer-to-peer marketplace intended for buying and selling Ethereum tokens. Smart contracts are used to connect buyers and sellers to complete trades. A variety of mainstream methods can be used to make payments, including PayPal. The Ether is held in escrow until the transaction is confirmed. The dApp offers many advantages compared to centralized crypto exchanges. It has no access to users’ private keys, making it immune to typical hacks. I should point out that hacks on major smart contracts have occurred in the past as well.

Decentraland

Decentraland is a virtual reality where users can buy and sell virtual land with their ownership recorded securely on the blockchain. They also can improve and develop the land and monetize it accordingly. Some examples would be building a casino, underwater hotel or an educational enterprise. The game uses a custom Ethereum token called MANA, which can be used to make property deals and to buy content. Also, The dApp developers state that their product is limited only by their users’ imagination, promising soon to roll out custom items and even the ability to control the laws of physics.

There are a lot more exciting dApps on the Ethereum horizon, the main hindrance for their development is the high internal pricing, so-called gas fees. When the network is congested, the speed of transactions goes down, and the gas fees go up. The community is aware of this and steps are being taken for scaling up the network. Solidity, the programming language used for Ethereum, is gaining ground among developers, as more of them are looking for ways to create exciting dApps. From the middle of the last year, the number of dApps on the Ethereum blockchain has risen from 400 to almost 2000 currently, with this number expected to rise further, especially after a successful scaling.

Source:

https://goo.gl/qyw8kD
https://goo.gl/U5SKJY
https://goo.gl/wTyXdm
https://goo.gl/D6EBtv
https://goo.gl/ZaakNz
https://goo.gl/8btidg
https://goo.gl/YZJ341

Photo by David McBee from Pexels

The TOP crypto Gaming and e-Sports platforms!

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You could say that video games are the most fertile ground for sprouting digital currencies. This daring statement can be exemplified by World of Warcraft, a MMORPG giant by Blizzard Inc. It is one of the biggest and most successful online games, still played 14 years after its release. WoW’s digital gold economy for trading in-game items created a huge black market with real world cache behind it. During the peak from 2007 until 2012 it was extensively sold on online black markets. The business was so lucrative, that Chinese prisoners were forced to mine it. By 2015 attempts were made to stabilize the market. Blizzard introduced the WoW Token, allowing players to exchange real money for virtual gold. Technically these tokens are not a cryptocurrency, but for an average user they look identical and can be spent the same way. Several gaming companies are now trying to integrate cryptocurrencies and blockchain technologies into their platforms. Mobile Warcraft game Heartstone now has more users than WoW, allowing players to mine gold for buying WoW Tokens, which can then be converted to Battle.net credits, used for purchases in other Blizzard games. This strategy has proven successful, making Blizzard one of the top video game publishers of all times.

Since these early developments, many cryptocurrencies and gaming platforms have been created, let us take a look at several of them.

One of the earliest gaming cryptocurrencies was GameCredits. It is based on a fork of the Bitcoin code and provides a basic API to create invoices within games. To make payments, the game has to be exited and a web browser used instead. This creates several problems, like centralization and the whole system going down due to hacking or the website going offline.

DigiByte is somewhat similar to GameCredits, also a Bitcoin fork, it has managed to implement a lot of code updates early on, leading the way for other altcoins. It made an early attempt to create a centralized reward system for playing games like Minecraft before going offline due to a DDoS attack. Since then, DigiByte has focused on general coin development and other target markets.

Another recent offshoot of GameCredits is MobileGo, a project with an aim to bypass high fees and restrictions of the main mobile app stores, allowing users to install an alternative store, usually with a bundle of partnered games, for which they pay with MobileGo Ethereum tokens. Plans to incite players with coupons and various VIP features are still in the making.

Enjin, an interesting project by an experienced web company in business for almost a decade and with a gamer network of millions of users. With the best traits of many gaming coins, robust and decentralized architecture, it can be called an Ethereum of gaming. Enjin lets game developers to turn tokens into game assets and then, any player who owns these assets, can turn them back into tokens anytime. Out of all gaming coins reviewed, it has the most ambitious plans- smart wallet for in-game purchases, escrow contact for trading items and Minecraft plugin. It collaborates with Bancor, providing on-chain exchange and showing the market value of game items. Plans are made to provide developers with a wide range of SDKs (Unity, UDK, C#, Java, PHP), web plugins, Android and iOS tools.

An eSports betting platform, HEROcoin, has a goal to eliminate the “House” advantage and wants to engage primarily with three types of users- token holders, players and game creators. Token holders receive a passive income from all game pools, winning players get their share of the tournament pool and game creators get tokens for facilitating and managing a game. This concept seems to be valid and interesting, but for the fact that everything is centered in the HeroSphere website.

One more eSports platform is FirstBlood, although it advertises itself as a more secure alternative, it still is centralized and vulnerable to the same risks mentioned above. It is still too early to judge and has to be followed up into the future.

Tradeplayz is a platform standing out because it allows players to win cryptocurrencies (Bitcoin, Ethereum, Litecoin, Ethereum Classic, Dash, Zcoin, Bitcoin Cash) by their skill in various games, such as chess, backgammon etc. It provides users with an opportunity to use their cryptocurrencies more efficiently, not having to wait for price raises.

With the booming market of online gaming, worth more than 80 billion USD, it seems likely that cryptocurrencies are in this market to stay for good. As these are early years, it remains to be seen how this relation will develop. Either we will have a universal gaming coin or a bunch of them, each tuned to a specific niche.

Source:

https://gamecredits.com
https://worldofwarcraft.com/en-us/
https://www.mobilego.io
https://enjincoin.io
https://www.herocoin.io
https://firstblood.io
http://tradeplayz.com

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