Threshold Signature: Advantages, How does it work, and Where is it Used?

2 min read

A ley unlocking a bitcoin vault

What is Threshold Cryptography?

Threshold cryptography is a digital network system that protects information from unauthorized access by encrypting it and distributing it exclusively between identified clusters of computer networks. This digital network system is called the Cryptosystem. It contains a group of computers that encrypt and restrict and execute the flow of information among them without any interference or infiltration by external parties like hackers and phishers.

How do Threshold digital signatures Work?

Threshold digital signatures are executed using a pair of keys known as Public and Private keys. Think of these keys as your home Padlock and its exclusive key that you keep securely to yourself or among certain occupants of your house.

For anyone to gain access into the Cryptosystem, the computer network has to have the correct pair of a Public key and its corresponding Private Key. 

Step 1 – The encrypted message is encoded using a public key

Step 2 – A threshold number of participating parties is set and each is assigned a digital identity.  

Step 3 – The corresponding private key is shared among participating members of the network.

Step 4 – To decrypt the message, sign a message or add to its content, each participating member (up to the predetermined threshold number) must cooperate in the decryption process using a predetermined signature protocol.

Threshold Signature Schemes

The threshold signature is a digital signature protocol that is constructed based on the idea of secure multi-party computing which creates a private key in the form of distributed key shares. It involves computer networks executing and sharing specific encoded messages among themselves in a seamless, secure and verifiable process. 

A Threshold signature protocol implies that there is a secure computation that involves several participants to jointly execute it. Security here implies that, in the specified computation or encoded message, all participants must provide their own private keys in order to make private input, and/or obtain results from the computation. 

Application of Threshold Signatures in Blockchain Technology 

The threshold signature scheme has been applied to many areas of digital life and virtual transactions. One of the most prominent applications of the TSS is in the area of Blockchain technology

In blockchain technology, TSS is deployed using a consensus algorithm to construct distributed ledgers. The signature scheme provides identity information for blockchain. All the transaction information on the blockchain is identified and verified through the unique signature of the transaction initiator. 

Advantages of the Threshold Signature Schemes

  • Security: No non-participant can gain unauthorized access into the cryptosystem without requisite signatures or cryptographic protocols to avoid the single point of failure.
  • Privacy: No participant within the cryptosystem can obtain or alter the private inputs of other participants from the key generation process.  
  • Correctness and verifiability: The TSS ensures correct execution, correctness and legitimacy of the information execution process is verifiable by all participants or authorized parties, mitigating the risks of smart contracts bugs.
  • Fairness and Immutability: Threshold Signatures ensure that all the parties that are involved in the computation and information execution, should be able to obtain the computation results in real-time and on-demand. 


There are other methods of cryptographic signature protocols that have been deployed in the past, such as; the Single Signature protocol and Multi-Signature protocol. However, it is widely agreed that the Threshold Signature is a much more advanced structure as it addresses the frailties and vulnerabilities of the aforementioned protocols. In general, the TSS creates a more flexible computation system and efficient verification structure, which also influences the design of key management systems (such as crypto wallets).

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