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Code Issues Releases Wiki Activity

New clients have to account for transactions from older clients; see Issue #31

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Minh T. Nguyen 2014-05-26 23:34:01 -07:00
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@ -326,7 +326,7 @@ K = 04325D52E3B7...CD90C2
Compressed public keys were introduced to bitcoin to reduce the size of transactions and conserve disk space on nodes that store the bitcoin blockchain database. Most transactions include the public key, required to validate the owner's credentials and spend the bitcoin. Each public key requires 513 bytes (prefix \+ x \+ y), which when multiplied by several hundred transactions per block, or tens of thousands of transactions per day, adds a significant amount of data to the blockchain.
As we saw in the section <<pubkey>> above, a public key is a point (x,y) on an elliptic curve. Since the curve expresses a mathematical function, a point on the curve represents a solution to the equation and therefore if we know the x coordinate we can calculate the y coordinate by solving the equation y^2^ mod p = (x^3^ + 7) mod p. That allows us to store only the x-coordinate of the public key point, omitting the y-coordinate and reducing the size of the key and the space required to store it by 256 bits. A 50% reduction in size in every transaction adds up to a lot of data saved over time!
As we saw in the section <<pubkey>> above, a public key is a point (x,y) on an elliptic curve. Since the curve expresses a mathematical function, a point on the curve represents a solution to the equation and therefore if we know the x-coordinate we can calculate the y-coordinate by solving the equation y^2^ mod p = (x^3^ + 7) mod p. That allows us to store only the x-coordinate of the public key point, omitting the y-coordinate and reducing the size of the key and the space required to store it by 256 bits. A 50% reduction in size in every transaction adds up to a lot of data saved over time!
Whereas uncompressed public keys have a prefix of +04+, compressed public keys start with either a +02+ or a +03+ prefix. Let's look at why there are two possible prefixes: since the left side of the equation is y^2^, that means the solution for y is a square root, which can have a positive or negative value. Visually, this means that the resulting y-coordinate can be above the x-axis or below the x-axis. As you can see from the graph of the elliptic curve, the curve is symmetric, meaning it is reflected like a mirror by the x-axis. So, while we can omit the y-coordinate we have to store the _sign_ of y (positive or negative), or in other words we have to remember if it was above or below the x-axis, as each of those options represents a different point and a different public key. When calculating the elliptic curve in binary arithmetic on the finite field of prime order p, the y coordinate is either even or odd, which corresponds to the positive/negative sign as explained above. Therefore, to distinguish between the two possible values of y, we store a +compressed public key+ with the prefix +02+ if the +y+ is even, and +03+ if it is odd, allowing the software to correctly deduce the y-coordinate from the x-coordinate and uncompress the public key to the full coordinates of the point.
@ -343,7 +343,7 @@ K = 02325D52E3B7...E5D378
The compressed public key, above, corresponds to the same private key, meaning that it is generated from the same private key. However it looks different from the uncompressed public key. More importantly, if we convert this compressed public key to a bitcoin address using the double-hash function (RIPEMD160(SHA256(K))) it will produce a _different_ bitcoin address. This can be confusing, because it means that a single private key can produce a public key expressed in two different formats (compressed and uncompressed) which produce two different bitcoin addresses. However, the private key is identical for both bitcoin addresses.
Compressed public keys are gradually becoming the default across bitcoin clients, which is having a significant impact on reducing the size of transactions and therefore the blockchain. However, not all clients support compressed public keys yet. Newer clients that support compressed public keys have to account for transactions and older clients which do not support compressed public keys. This is especially important when a wallet application is importing private keys from another bitcoin wallet application, because the new wallet needs to scan the blockchain to find transactions corresponding to these imported keys. Which bitcoin addresses should the bitcoin wallet scan for? The bitcoin addresses produced by uncompressed public keys, or the bitcoin addresses produced by compressed public keys? Both are valid bitcoin addresses, both can be signed for by the private key, but they are different addresses!
Compressed public keys are gradually becoming the default across bitcoin clients, which is having a significant impact on reducing the size of transactions and therefore the blockchain. However, not all clients support compressed public keys yet. Newer clients that support compressed public keys have to account for transactions from older clients which do not support compressed public keys. This is especially important when a wallet application is importing private keys from another bitcoin wallet application, because the new wallet needs to scan the blockchain to find transactions corresponding to these imported keys. Which bitcoin addresses should the bitcoin wallet scan for? The bitcoin addresses produced by uncompressed public keys, or the bitcoin addresses produced by compressed public keys? Both are valid bitcoin addresses, both can be signed for by the private key, but they are different addresses!
To resolve this issue, when private keys are exported from a wallet, the Wallet Import Format that is used to represent them is implemented differently in newer bitcoin wallets, to indicate that these private keys have been used to produce _compressed_ public keys and therefore _compressed_ bitcoin addresses. This allows the importing wallet to distinguish between private keys originating from older or newer wallets and search the blockchain for transactions with bitcoin addresses corresponding to the compressed, or the uncompressed public keys. Let's look at how this works in more detail, in the next section.