FROST: advancing and collaborative custody of Bitcoin through enhanced privacy and security
The cryptocurrency landscape has witnessed significant advancements in recent years, particularly in the realm of Bitcoin custody and transaction security. Among these innovations, FROST stands out as a pivotal development that leverages the strengths of Schnorr signatures and Taproot addresses to enhance both privacy and security in collaborative Bitcoin custody scenarios.
Article originally prepared in Italian for my personal podcast Disruptive Talks (read it here). This content is also available as an audio podcast in episode S01E02 of Disruptive Talks on Spotify, Apple Podcasts, Deezer, Amazon Music, available here.
But what exactly is FROST?
FROST, an acronym for Flexible Round-Optimized Schnorr Threshold Signatures, represents a sophisticated cryptographic protocol that builds upon two fundamental technological advancements in the Bitcoin ecosystem: Schnorr signatures, introduced in 2019, and Taproot addresses, activated in 2021.
Schnorr signatures, named after their inventor Claus Schnorr, offer several advantages over the previously used Elliptic Curve Digital Signature Algorithm (ECDSA):
- Linearity: Schnorr signatures allow for signature aggregation, a crucial feature for FROST’s functionality.
- Provable security: they provide stronger security guarantees under the discrete logarithm assumption.
- Simplicity: the mathematical structure of Schnorr signatures is more straightforward, leading to easier implementation and analysis.
On another hand, Taproot, a soft fork upgrade to Bitcoin, introduced a new type of output script that leverages Schnorr signatures. It enables:
- Enhanced privacy: by making complex transactions indistinguishable from simple ones.
- Improved scalability: through reduced transaction size and more efficient script execution.
- Increased flexibility: allowing for more complex spending conditions without revealing them on-chain unless necessary.
FROST Protocol Mechanics
At its core, FROST enables a group of participants to collaboratively generate and control a shared public key, while individually maintaining portions of the corresponding private key. This is achieved through a sophisticated combination of threshold cryptography and multi-party computation (MPC).
The protocol operates in two main phases:
- Distributed Key Generation (DKG): participants collectively generate a shared public key and distribute shares of the private key among themselves. This process ensures that no single party ever possesses the full private key.
- Threshold Signing: when a transaction needs to be signed, a predetermined threshold of participants must cooperate to produce a valid signature. This threshold can be set to any value from 1 to the total number of participants, allowing for flexible security policies.
The signing process in FROST is optimized to require only two rounds of communication between participants, significantly reducing latency compared to traditional multi-signature schemes.
One of the most significant advantages is its privacy-enhancing properties. On the Bitcoin blockchain, transactions signed with FROST are indistinguishable from those signed by a single private key. This property, known as “key aggregation,” provides substantial privacy benefits such as obscured ownership structure (external observers cannot determine whether an address is controlled by a single entity or a group of collaborators), reduced on-chain footprint (by eliminating the need for complex multi-signature scripts, FROST reduces the amount of data published on the blockchain, further enhancing privacy) and improved fungibility (the indistinguishability of FROST signatures from single-key signatures contributes to the overall fungibility of Bitcoin, as it becomes harder to discriminate against coins based on their transaction history.).
Several projects in the Bitcoin ecosystem are actively working on implementing FROST:
- BlockStream’s MuSig2: an implementation of FROST principles optimized for Bitcoin’s specific requirements.
- ZenGo’s FROST implementation: focused on mobile and user-friendly applications of threshold signatures.
- Unchained Capital’s Collaborative Custody Solution: leveraging FROST for institutional-grade Bitcoin custody.
Challenges and finale note
While FROST represents a significant advancement several challenges remain to be addressed. One of the primary concerns is the implementation complexity: ensuring correct and secure implementation various platforms and programming languages is crucial for widespread adoption and reliability. This requires meticulous attention to detail and rigorous testing to prevent vulnerabilities that could compromise the security of users’ assets.
Another significant hurdle lies in key management: developing user-friendly yet secure methods for participants to manage their key shares is essential for the practical application of FROST. This challenge involves striking a delicate balance between accessibility and security, ensuring that users can easily interact with their key shares while maintaining robust protection against unauthorized access or loss.
Looking towards the future, several promising research directions emerge. One area of exploration involves integrating FROST with other privacy-enhancing technologies like CoinJoin. This integration could potentially create even more robust privacy solutions for Bitcoin transactions, further obfuscating the link between senders and recipients.
Another critical area of research focuses on post-quantum cryptography. As quantum computing technology advances, it’s essential to explore alternatives to current cryptographic methods that may be vulnerable to quantum attacks. Developing quantum-resistant versions of FROST could ensure its long-term viability and security in a post-quantum world.
Lastly, researchers are working on developing more efficient communication protocols for large-scale FROST implementations. As the number of participants in a FROST scheme increases, so does the complexity of communication between them. Optimizing these protocols could lead to improved scalability and performance, making FROST more viable for larger organizations or more complex custody arrangements.
These challenges and future directions highlight the dynamic nature of cryptographic research and development in the blockchain space. As FROST continues to evolve, it promises to play a crucial role in shaping the future of secure and private collaborative Bitcoin custody.
Notes
For readers interested in deepening their understanding of FROST and its implications for Bitcoin custody, the following resources provide valuable information:
- FROST Protocol Specification: the official IETF draft detailing the FROST protocol.
https://datatracker.ietf.org/doc/draft-irtf-cfrg-frost/ - Blockstream’s MuSig2 Implementation: a practical implementation of FROST principles for Bitcoin.
https://glossary.blockstream.com/musig2/ - ZenGo’s FROST Implementation: an open-source implementation focusing on mobile and user-friendly applications.
https://github.com/ZenGo-X/awesome-tss - Bitcoin Optech on Schnorr Signatures: a comprehensive guide to Schnorr signatures in Bitcoin.
https://bitcoinops.org/en/topics/schnorr-signatures/ - Taproot Activation in Bitcoin: official Bitcoin Core documentation on Taproot.
https://github.com/bitcoin/bitcoin/blob/master/doc/release-notes/release-notes-0.21.0.md#taproot - Threshold Cryptography Overview: a Stanford University lecture on the principles behind threshold cryptography.
https://crypto.stanford.edu/~skim13/tokyo2018.pdf - Post-Quantum Cryptography: NIST’s ongoing project on standardizing post-quantum cryptographic algorithms.
https://csrc.nist.gov/projects/post-quantum-cryptography - CoinJoin Implementation: an overview of CoinJoin, a complementary privacy technology.
https://github.com/bitcoin/bips/blob/master/bip-0078.mediawiki - Cryptography and Network Security Principles: a comprehensive textbook on cryptographic principles (5th Edition by William Stallings).
https://www.pearson.com/en-us/subject-catalog/p/cryptography-and-network-security-principles-and-practice/P200000003295 - Bitcoin Developer Guide: official resource for understanding Bitcoin’s technical aspects.
https://developer.bitcoin.org/