About transactions are validated

In a blockchain network, transactions are broadcasted to all nodes in the network, and each node validates the transaction by checking if it meets the predefined rules and standards. These rules may include the availability of funds, transaction fees, and other conditions set by the network.

Once a node validates the transaction, it broadcasts the transaction to other nodes in the network, which also validate it using the same process. Eventually, a majority of nodes will reach consensus and accept the transaction into the network's ledger or distributed database.

The consensus mechanism used by a blockchain network varies depending on the system, and can include methods such as Proof of Work (PoW), Proof of Stake (PoS), or Delegated Proof of Stake (DPoS). These methods ensure that all nodes in the network agree on the validity of the transaction, and prevent the possibility of fraudulent or erroneous data being added to the ledger.

Threshold Signature Scheme (TSS) is a cryptographic technique in which a group of participants work together to sign a message such that the signature is valid if and only if a predefined threshold of the participants provides their contribution. This scheme is particularly useful in blockchain networks where multiple parties need to agree on a transaction or sign a smart contract.

In the context of smart contracts, TSS can be used to improve security, scalability, and privacy of the contract. For example, TSS can be used to distribute key management among multiple parties, allowing for better security and reducing the risk of a single point of failure. Additionally, TSS can be used to facilitate multiple parties signing a smart contract, reducing the time and cost required to execute the contract.

TSS has been successfully implemented in various blockchain platforms such as Ethereum, Hyperledger Fabric, and Corda. These platforms are using TSS to address key challenges associated with the adoption of smart contracts, such as scalability, interoperability, and privacy.

Overall, TSS is an important cryptographic tool that enables better security and privacy in smart contract execution, making blockchain networks more efficient and secure.

TSS and smart contracts

Over the years, researchers have found many uses for digital signatures, and some are surprisingly non-trivial. As mentioned, TSS is a cryptographic primitive that can greatly increase security. In the context of blockchains, we may say that many functionalities can be replaced with TSS-based cryptography. Decentralized applications, layer 2 scaling solutions, atomic swaps, mixing, inheritance, and much more can be built on top of a TSS framework. This would eventually allow for expensive and risky on-chain smart contract operations to be replaced by cheaper and more reliable alternatives. To give some concrete examples: Multi-Hop Locks makes use of two-party signatures in a clever way and can be used as an alternative to Bitcoin lightning network with a more secure and private payment channel network. ShareLock is probably the cheapest on-chain mixing solution for Ethereum, based on verification of a single threshold signature.