Cryptography for Bitcoin and friends

Numerous cryptographic extensions to Bitcoin have been proposed since Satoshi Nakamoto introduced the revolutionary design in 2008. However, only few proposals have been adopted in Bitcoin and other prevalent cryptocurrencies, whose resistance to fundamental changes has proven to grow with their success. In this dissertation, we introduce four cryptographic techniques that advance the functionality and privacy provided by Bitcoin and similar cryptocurrencies without requiring fundamental changes in their design: First, we realize smart contracts that disincentivize parties in distributed systems from making contradicting statements by penalizing such behavior by the loss of funds in a cryptocurrency. Second, we propose CoinShuffle++, a coin mixing protocol which improves the anonymity of cryptocurrency users by combining their transactions and thereby making it harder for observers to trace those transactions. The core of CoinShuffle++ is DiceMix, a novel and efficient protocol for broadcasting messages anonymously without the help of any trusted third-party anonymity proxies and in the presence of malicious participants. Third, we combine coin mixing with the existing idea to hide payment values in homomorphic commitments to obtain the ValueShuffle protocol, which enables us to overcome major obstacles to the practical deployment of coin mixing protocols. Fourth, we show how to prepare the aforementioned homomorphic commitments for a safe transition to post-quantum cryptography.Seit seiner revolutionären Erfindung durch Satoshi Nakamoto im Jahr 2008 wurden zahlreiche kryptographische Erweiterungen für Bitcoin vorgeschlagen. Gleichwohl wurden nur wenige Vorschläge in Bitcoin und andere weit verbreitete Kryptowährungen integriert, deren Resistenz gegen tiefgreifende Veränderungen augenscheinlich mit ihrer Verbreitung wächst. In dieser Dissertation schlagen wir vier kryptographische Verfahren vor, die die Funktionalität und die Datenschutzeigenschaften von Bitcoin und ähnlichen Kryptowährungen verbessern ohne deren Funktionsweise tiefgreifend verändern zu müssen. Erstens realisieren wir Smart Contracts, die es erlauben widersprüchliche Aussagen einer Vertragspartei mit dem Verlust von Kryptogeld zu bestrafen. Zweitens schlagen wir CoinShuffle++ vor, ein Mix-Protokoll, das die Anonymität von Benutzern verbessert, indem es ihre Transaktionen kombiniert und so deren Rückverfolgung erschwert. Sein Herzstück ist DiceMix, ein neues und effizientes Protokoll zur anonymen Veröffentlichung von Nachrichten ohne vertrauenswürdige Dritte und in der Präsenz von bösartigen Teilnehmern. Drittens kombinieren wir dieses Protokoll mit der existierenden Idee, Geldbeträge in Commitments zu verbergen, und erhalten so das ValueShuffle-Protokoll, das uns ermöglicht, große Hindernisse für den praktischen Einsatz von Mix-Protokollen zu überwinden. Viertens zeigen wir, wie die dabei benutzten Commitments für einen sicheren Übergang zu Post-Quanten-Kryptographie vorbereitet werden können

The Internet of Money between Anonymity and Publicity: Legal Challenges of Distributed Ledger Technologies in the Crypto Financial Landscape

This research project focuses on the impacts exerted by the tech schemes behind virtual currencies on the EU framework to prevent the misuse of the financial system and it aims to explore legal challenges posed in the IoM landscape by the double-edged nature of DLTs as both transparency and privacy-oriented. On the one hand, it plans to identify effective legislative and regulatory measures to ensure crypto accountability from an AML/CFT standpoint, as well as to assess the relevant role of pseudonymity. On the other hand, it pursues to discover innovative legal approaches to secure AML/CFT active cooperation in the crypto ecosystem(s), to the end of mitigating anonymity and traceability concerns while respecting both the value of publicity and transparency in the law and the conceptual origin of the crypto economy

Privacy-preserving Cooperative Services for Smart Traffic

Communication technology and the increasing intelligence of things enable new qualities of cooperation. However, it is often unclear how complex functionality can be realized in a reliable and abuse-resistant manner without harming users\u27 privacy in the face of strong adversaries. This thesis focuses on three functional building blocks that are especially challenging in this respect: cooperative planning, geographic addressing and the decentralized provision of pseudonymous identifiers

Characterizing Orphan Transactions in the Bitcoin Network

Orphan transactions are those whose parental income-sources are missing at the time that they are processed. These transactions are not propagated to other nodes until all of their missing parents are received, and they thus end up languishing in a local buffer until evicted or their parents are found. Although there has been little work in the literature on characterizing the nature and impact of such orphans, it is intuitive that they may affect throughput on the Bitcoin network. This work thus seeks to methodically research such effects through a measurement campaign of orphan transactions on live Bitcoin nodes. Our data show that, surprisingly, orphan transactions tend to have fewer parents on average than non-orphan transactions. Moreover, the salient features of their missing parents are a lower fee and larger size than their non-orphan counterparts, resulting in a lower transaction fee per byte. Finally, we note that the network overhead incurred by these orphan transactions can be significant, exceeding 17% when using the default orphan memory pool size (100 transactions). However, this overhead can be made negligible, without significant computational or memory demands, if the pool size is merely increased to 1000 transactions

Fine-Grained Accountable Privacy via Unlinkable Policy-Compliant Signatures

Privacy-preserving payment systems face the difficult task of balancing privacy and accountability: on one hand, users should be able to transact privately and anonymously, on the other hand, no illegal activities should be tolerated. The challenging question of finding the right balance lies at the core of the research on accountable privacy that stipulates the use of cryptographic techniques for policy enforcement, but still allows an authority to revoke the anonymity of transactions whenever such an automatic enforcement is technically not supported. Current state-of-the-art systems are only able to enforce rather limited policies, such as spending or transaction limits, or assertions about participants, but are unable to enforce more complex policies that for example jointly evaluate both, the private credentials of sender and recipient-let alone to do this without an auditor in the loop during payment. This limits the cases where privacy revocation can be avoided as the method to fulfill regulations, which is unsatisfactory from a data-protection viewpoint and shows the need for cryptographic solutions that are able to elevate accountable privacy to a more fine-grained level. In this work, we present such a solution. We show how to enforce complex policies while offering strong privacy and anonymity guarantees by enhancing the notion of policy-compliant signatures (PCS) introduced by Badertscher, Matt and Waldner (TCC\u2721). In more detail, we first define the notion of unlinkable PCS (ul-PCS) and show how this cryptographic primitive can be generically integrated with a wide range of systems including UTxO-based ledgers, privacy-preserving protocols like Monero or Zcash, and central-bank digital currencies. We give a generic construction for ul-PCS for any policy, and optimized constructions tailored for special policy classes, such as role-based policies and separable policies. To bridge the gap between theory and practice, we provide prototype implementations for all our schemes. We give the first benchmarks for policy-compliant signatures in general, and demonstrate their feasibility for reasonably sized attribute sets for the special cases

Zether: Towards Privacy in a Smart Contract World

Blockchain-based smart contract platforms like Ethereum have become quite popular as a way to remove trust and add transparency to distributed applications. While different types of important applications can be easily built on such platforms, there does not seem to be an easy way to add a meaningful level of privacy to them. In this paper, we propose Zether, a fully-decentralized, confidential payment mechanism that is compatible with Ethereum and other smart contract platforms. We take an account-based approach similar to Ethereum for efficiency and usability. We design a new smart contract that keeps the account balances encrypted and exposes methods to deposit, transfer and withdraw funds to/from accounts through cryptographic proofs. We describe techniques to protect Zether against replay attacks and front-running situations. We also develop a mechanism to enable interoperability with arbitrary smart contracts. This helps to make several popular applications like auctions, payment channels, voting, etc. confidential. As a part of our protocol, we propose $\Sigma$-Bullets, an improvement of the existing zero-knowledge proof system, Bulletproofs. $\Sigma$-Bullets make Bulletproofs more inter-operable with Sigma protocols, which is of general interest. We implement Zether as an Ethereum smart contract and show the practicality of our design by measuring the amount of gas used by the Zether contract. A Zether confidential transaction costs about 0.014 ETH or approximately $1.51 (as of early Feb, 2019). We discuss how small changes to Ethereum, which are already being discussed independently of Zether, would drastically reduce this cost

Achieving cybersecurity in blockchain-based systems: a survey

With The Increase In Connectivity, The Popularization Of Cloud Services, And The Rise Of The Internet Of Things (Iot), Decentralized Approaches For Trust Management Are Gaining Momentum. Since Blockchain Technologies Provide A Distributed Ledger, They Are Receiving Massive Attention From The Research Community In Different Application Fields. However, This Technology Does Not Provide With Cybersecurity By Itself. Thus, This Survey Aims To Provide With A Comprehensive Review Of Techniques And Elements That Have Been Proposed To Achieve Cybersecurity In Blockchain-Based Systems. The Analysis Is Intended To Target Area Researchers, Cybersecurity Specialists And Blockchain Developers. For This Purpose, We Analyze 272 Papers From 2013 To 2020 And 128 Industrial Applications. We Summarize The Lessons Learned And Identify Several Matters To Foster Further Research In This AreaThis work has been partially funded by MINECO, Spain grantsTIN2016-79095-C2-2-R (SMOG-DEV) and PID2019-111429RB-C21 (ODIO-COW); by CAM, Spain grants S2013/ICE-3095 (CIBERDINE),P2018/TCS-4566 (CYNAMON), co-funded by European Structural Funds (ESF and FEDER); by UC3M-CAM grant CAVTIONS-CM-UC3M; by the Excellence Program for University Researchers, Spain; and by Consejo Superior de Investigaciones Científicas (CSIC), Spain under the project LINKA20216 (“Advancing in cybersecurity technologies”, i-LINK+ program)

Mind the Gap: Trade-Offs between Distributed Ledger Technology Characteristics

When developing peer-to-peer applications on Distributed Ledger Technology (DLT), a crucial decision is the selection of a suitable DLT design (e.g., Ethereum) because it is hard to change the underlying DLT design post hoc. To facilitate the selection of suitable DLT designs, we review DLT characteristics and identify trade-offs between them. Furthermore, we assess how DLT designs account for these trade-offs and we develop archetypes for DLT designs that cater to specific quality requirements. The main purpose of our article is to introduce scientific and practical audiences to the intricacies of DLT designs and to support development of viable applications on DLT