What is Frostsnap? – Bitfinex blog

19 Jan What is Frostsnap?

FROST, short for Flexible Round-Optimised Schnorr Threshold, is a specialised cryptographic signature scheme designed to enhance the efficiency and security of digital signatures in a multi-party or threshold setting. Frostsnap-compatible wallets will be able to leverage FROST for new flexible kinds of multisignature Bitcoin wallets.

Increased Security Through FROST & Flexible Shared Custody

Frostsnap represents a significant advancement over the current implementations of Bitcoin multisig wallets, offering a suite of features that greatly enhance flexibility and security. Traditional Bitcoin Script multisig wallets, while secure, have limitations in their inability to adapt to changing needs without creating a new wallet. Frostsnap, however, introduces groundbreaking capabilities that allow for more dynamic and adaptable multisig setups. 

With Frostsnap, users can change hardware wallets, add new signers post-key generation, and even render stolen hardware wallets incompatible, all without requiring additional on-chain transactions. This adaptability is not only a technical breakthrough but also a practical one, simplifying the management of multisig wallets and enhancing security.

What’s a multisig wallet? Before the creation of FROST, and Frostsnap, multisig wallets in Bitcoin offered a highly secure method of managing funds by requiring multiple signatures, or approvals, from different parties before any transaction could be executed. These traditional multisig wallets operated using Bitcoin Script, where each wallet had a predetermined number of signers and a required minimum number of signatures to authorise transactions.

However, they had a notable limitation, the inability to modify the number of signers or change the signatory devices without creating a new multisig wallet and transferring the funds. This rigidity meant that users couldn’t dynamically adjust their security setups or replace signatory devices without going through the cumbersome process of setting up a new wallet and moving their Bitcoin. Despite these constraints, traditional multisig wallets were and continue to be a cornerstone of Bitcoin’s security framework for collective fund management.

At its core, Frostsnap utilises the Flexible Round-Optimised Schnorr Threshold (FROST) signatures to optimise network efficiency, even over unreliable networks, while maintaining the robust security features essential for multisig operations. This technology allows Frostsnap wallets to operate seamlessly within the existing Bitcoin network infrastructure, without needing a fork or any proprietary software. 

Frostsnap’s design enables users to back up information onto new devices, facilitating the easy swapping of devices in a multisig setup and allowing the exclusion of compromised devices with a threshold number of signatures.

This level of control and security is complemented by enhanced privacy features and reduced on-chain fees, thanks to the integration of Taproot and Schnorr signatures. Frostsnap not only obscures the existence and attributes of a wallet but also consolidates signature-related data, reducing the transactional footprint on the blockchain. The Frostsnap project, being open-source, invites collaboration and innovation, setting the stage for a new standard in multisig wallet technology.

The Evolution of Multi Signature Wallets in Bitcoin

Before the development of FROST signatures, traditional multisig wallets provided several key benefits in trust minimised Bitcoin security. Traditional multisig wallets significantly improved security by requiring multiple signatures to authorise a transaction. This distributed control reduced the risk of funds being stolen or misappropriated by a single party.

They were ideal for scenarios where funds needed to be collectively managed, such as in organisations, investment groups, or between family members, as they necessitated approval from multiple stakeholders. In organisational contexts, multisig wallets could enforce certain governance protocols or dispute resolution processes by requiring consensus among key holders.

By distributing the signing authority across multiple parties or devices, multisig wallets mitigated the risk of a single point of failure. If one key was compromised or lost, the funds remained secure, as other keys were required to access them.

They allowed for varying levels of access control, where different signatories could have different roles or levels of authority within the wallet’s operation. Multisig setups offered a level of transparency for transactions, as each transaction required multiple approvals, making it easier to audit and track fund movements.

Traditional multisig wallets had limitations in flexibility, such as the inability to easily change signatories or adapt the wallet structure without creating a new wallet and moving funds. Despite these limitations, they have so far provided a robust foundation for secure, collective Bitcoin custody and management.

FROST on the other hand, represents a substantial upgrade to traditional Bitcoin multisig wallets, opening up a myriad of new possibilities with its Frostsnap implementation. One of the most significant enhancements is the ability to modify signatories in a multisig setup without needing to create a new wallet or move funds. This flexibility allows users to easily add or remove signatories, replace hardware wallets, or adjust the threshold of signers required for transactions.

Frostsnap provides mechanisms to exclude compromised or stolen hardware wallets from a multisig configuration, enhancing security. Additionally, it enables the backup and restoration of key information onto new devices, mitigating the risks associated with device loss or theft.

By leveraging Taproot, Frostsnap offers greater privacy and efficiency. It can obscure the existence or specific attributes of a multisig wallet, and consolidate signature-related data, reducing the transaction size and thus the fees compared to traditional multisig transactions.

Frostsnap extends the utility of multisig wallets beyond just fund management. It can be used for signing documents, identity verification, and creating complex governance structures, thus broadening the scope of applications in both personal and organisational contexts.

Frostsnap introduces the potential for innovative uses like Nostr multisig and social media multisigs, integrating the security of Bitcoin multisig into diverse digital platforms and applications.

Despite the increased functionality, a FROST wallet maintains cost efficiency, charging the same fees as single-signature wallets. This is a significant improvement over traditional multisigs, which often incurred higher fees due to their complexity.

The currently ongoing development of user-friendly Frostsnap devices and software aims to simplify the multisig experience, making it more accessible and less daunting for users, especially those new to Bitcoin and cryptographic security.