Practical Witness-Key-Agreement for Blockchain-based Dark Pools Financial Trading

We introduce a new cryptographic scheme, Witness Key Agreement (WKA), that allows a party to securely agree on a secret key with a counter party holding publicly committed information only if the counter party also owns a secret witness in a desired (arithmetic) relation with the committed information. Our motivating applications are over-the-counter (OTC) markets and dark pools, popular trading mechanisms. In such pools investors wish to communicate only to trading partners whose transaction conditions and asset holdings satisfy some constraints. The investor must establish a secure, authenticated channel with eligible traders where the latter committed information matches a desired relation. At the same time traders should be able to show eligibility while keeping their financial information secret. We construct a WKA scheme for languages of statements proven in the designated-verifier Succinct Zero-Knowledge Non-Interactive Argument of Knowledge Proof System (zk-SNARK). We illustrate the practical feasibility of our construction with some arithmetic circuits of practical interest by using data from US$ denominated corporate securities traded on Bloomberg Tradebook

Distributed financial exchanges:Security challenges and design principles

Implementing secure, distributed, and economically viable financial exchanges radically challenges traditional constructs such as zero knowledge and secure multiparty computation. To boost discussions of such practical challenges, we enucleate the design principles to build a secure, distributed futures exchange

Affordable Security or Big Guy vs Small Guy

When we design a security protocol we assume that the humans (or organizations) playing Alice and Bob do not make a difference. In particular, their financial capacity seems to be irrelevant. In the latest trend to guarantee that secure multi-party computation protocols are fair and not vulnerable to malicious aborts, a slate of protocols has been proposed based on penalty mechanisms. We look at two well-known penalty mechanisms, and show that the so-called see-saw mechanism (Kumaresan et al., CCS 15), is only fit for people with deep pockets, well beyond the stake in the multi-party computation itself. Depending on the scheme, fairness is not affordable by everyone which has several policy implications on protocol design. To explicitly capture the above issues, we introduce a new property called financial fairness

Cryptographic and Financial Fairness

A recent trend in multi-party computation is to achieve cryptographic fairness via monetary penalties, i.e. each honest player either obtains the output or receives a compensation in the form of a cryptocurrency. We pioneer another type of fairness, financial fairness, that is closer to the real-world valuation of financial transactions. Intuitively, a penalty protocol is financially fair if the net present cost of participation (the total value of cash inflows less cash outflows, weighted by the relative discount rate) is the same for all honest participants, even when some parties cheat. We formally define the notion, show several impossibility results based on game theory, and analyze the practical effects of (lack of) financial fairness if one was to run the protocols for real on Bitcoin using Bloomberg's dark pool trading. For example, we show that the ladder protocol (CRYPTO'14), and its variants (CCS'15 and CCS'16), fail to achieve financial fairness both in theory and in practice, while the penalty protocols of Kumaresan and Bentov (CCS'14) and Baum, David and Dowsley (FC'20) are financially fair

Vision: What If They All Die? Crypto Requirements For Key People

The question above seems absurd but it is what a Bank has to ask to its suppliers to meet the European Central Bank (ECB) regulations on the continuity of critical business functions. The bank has no intention of mingling in the daily work of the supplier (that's the whole purpose of outsourcing). Nor the supplier has any intention to make available to the bank the keys of its kingdom (it is actually forbidden to do so by the very same regulations). We need a way to do so only when the hearts of the key people stop beating. In this paper, we discuss whether recent advances in cryptography (secret sharing and MPC, time-lock puzzles, etc.) can replace the classical approach based on human redundancy

Practical Witness-Key-Agreement for Blockchain-Based Dark Pools Financial Trading

We introduce a new cryptographic scheme, Witness Key Agreement (WKA), that allows a party to securely agree on a secret key with a counter party holding publicly committed information only if the counter party also owns a secret witness in a desired (arithmetic) relation with the committed information. Our motivating applications are over-the-counter (OTC) markets and dark pools, popular trading mechanisms. In such pools investors wish to communicate only to trading partners whose transaction conditions and asset holdings satisfy some constraints. The investor must establish a secure, authenticated channel with eligible traders where the latter committed information matches a desired relation. At the same time traders should be able to show eligibility while keeping their financial information secret. We construct a WKA scheme for languages of statements proven in the designated-verifier Succinct Zero-Knowledge Non-Interactive Argument of Knowledge Proof System (zk-SNARK). We illustrate the practical feasibility of our construction with some arithmetic circuits of practical interest by using data from US$ denominated corporate securities traded on Bloomberg Tradebook