Diversification Across Mining Pools: Optimal Mining Strategies under PoW

Mining is a central operation of all proof-of-work (PoW) based cryptocurrencies. The vast majority of miners today participate in "mining pools" instead of "solo mining" in order to lower risk and achieve a more steady income. However, this rise of participation in mining pools negatively affects the decentralization levels of most cryptocurrencies. In this work, we look into mining pools from the point of view of a miner: We present an analytical model and implement a computational tool that allows miners to optimally distribute their computational power over multiple pools and PoW cryptocurrencies (i.e. build a mining portfolio), taking into account their risk aversion levels. Our tool allows miners to maximize their risk-adjusted earnings by diversifying across multiple mining pools which enhances PoW decentralization. Finally, we run an experiment in Bitcoin historical data and demonstrate that a miner diversifying over multiple pools, as instructed by our model/tool, receives a higher overall Sharpe ratio (i.e. average excess reward over its standard deviation/volatility).Comment: 13 pages, 16 figures. Presented at WEIS 201

MiniLedger: Compact-sized Anonymous and Auditable Distributed Payments

While privacy preserving distributed payment schemes manage to drastically improve user privacy, they come at the cost of generating new regulatory concerns: in a private ledger the transactions cannot be subject to any level of auditing, and thus are not compatible with tracing illegal behaviors. In this work we present MiniLedger, a distributed payment system which not only guarantees the privacy of transactions, but also offers built-in functionalities for various types of audits by any external authority. MiniLedger is the first private and auditable payment system with storage costs independent of the number of transactions. To achieve such a storage improvement, we introduce pruning functionalities for the transaction history while maintaining integrity and auditing. We provide formal security definitions and a number of extensions for various auditing levels. Our evaluation results show that MiniLedger is practical in terms of storage requiring as low as 70KB per participant for 128 bits of security, and depending on the implementation choices, can prune 1 million transactions in less than a second

TumbleBit: an untrusted Bitcoin-compatible anonymous payment hub

This paper presents TumbleBit, a new unidirectional unlinkable payment hub that is fully compatible with today s Bitcoin protocol. TumbleBit allows parties to make fast, anonymous, off-blockchain payments through an untrusted intermediary called the Tumbler. TumbleBits anonymity properties are similar to classic Chaumian eCash: no one, not even the Tumbler, can link a payment from its payer to its payee. Every payment made via TumbleBit is backed by bitcoins, and comes with a guarantee that Tumbler can neither violate anonymity, nor steal bitcoins, nor print money by issuing payments to itself. We prove the security of TumbleBit using the real/ideal world paradigm and the random oracle model. Security follows from the standard RSA assumption and ECDSA unforgeability. We implement TumbleBit, mix payments from 800 users and show that TumbleBits offblockchain payments can complete in seconds.https://eprint.iacr.org/2016/575.pdfPublished versio

Efficient Constructions of Pairing Based Accumulators

Cryptographic accumulators are a crucial building block for a variety of applications where you need to represent a set of elements in a compact format while still being able to provide proofs of (non)membership. In this work, we give a number of accumulator constructions for the bilinear pairing setting in the trapdoor-based scenario, where a trusted manager maintains the accumulator. Using modular accumulator techniques, we first present the first optimally efficient (in terms of communication cost) dynamic, positive accumulators in the pairing setting. Additionally, we present a novel modular approach to construct universal accumulators that avoid costly non-membership proofs. We instantiate our generic construction and present the first universal accumulator in the bilinear pairing setting, that achieves constant parameter size, constant cost for element additions/deletions and witness generation by the manager, constant witness updates by the users and constant (non)membership verification. We finally show how our proposed universal accumulator construction can give rise to efficient ZK accumulators with constant non-membership witness updates

Anonymous Credentials Light

We define and propose an efficient and provably secure construction of blind signatures with attributes. Prior notions of blind signatures did not yield themselves to the construction of anonymous credential systems, not even if we drop the unlinkability requirement of anonymous credentials. Our new notion in contrast is a convenient building block for anonymous credential systems. The construction we propose is efficient: it requires just a few exponentiations in a prime-order group in which the decisional Diffie-Hellman problem is hard. Thus, for the first time, we give a provably secure construction of anonymous credentials that can work in the elliptic group setting without bilinear pairings. In contrast, prior provably secure constructions were based on the RSA group or on groups with pairings, which made them prohibitively inefficient for mobile devices, RFIDs and smartcards. The only prior efficient construction that could work in such elliptic curve groups, due to Brands, does not have a proof of security

Watermarkable Public key Encryption With Efficient Extraction Under Standard Assumptions

The current state of the art in watermarked public-key encryption schemes under standard cryptographic assumptions suggests that extracting the embedded message requires either linear time in the number of marked keys or the a-priori knowledge of the marked key employed in the decoder. We present the first scheme that obviates these restrictions in the secret-key marking model, i.e., the setting where extraction is performed using a private extraction key. Our construction offers constant time extraction complexity with constant size keys and ciphertexts and is secure under standard assumptions, namely the Decisional Composite Residuosity Assumption [Eurocrypt \u2799] and the Decisional Diffie Hellman in prime order subgroups of  square higher order residues

Oblivious Accumulators

A cryptographic accumulator is a succinct set commitment scheme with efficient (non-)membership proofs that typically supports updates (additions and deletions) on the accumulated set. When elements are added to or deleted from the set, an update message is issued. The collection of all the update messages essentially leaks the underlying accumulated set which in certain applications is not desirable. In this work, we define oblivious accumulators, a set commitment with concise membership proofs that hides the elements and the set size from every entity: an outsider, a verifier or other element holders. We formalize this notion of privacy via two properties: element hiding and add-delete indistinguishability. We also define almost-oblivious accumulators, that only achieve a weaker notion of privacy called add-delete unlinkability. Such accumulators hide the elements but not the set size. We consider the trapdoorless, decentralized setting where different users can add and delete elements from the accumulator and compute membership proofs. We then give a generic construction of an oblivious accumulator based on key-value commitments (KVC). We also show a generic way to construct KVCs from an accumulator and a vector commitment scheme. Finally, we give lower bounds on the communication (size of update messages) required for oblivious accumulators and almost-oblivious accumulators

Watermarking Public-key Cryptographic Functionalities and Implementations

A watermarking scheme for a public-key cryptographic functionality enables the embedding of a mark in the instance of the secret-key algorithm such that the functionality of the original scheme is maintained, while it is infeasible for an adversary to remove the mark (unremovability) or mark a fresh object without the marking key (unforgeability). Cohen et al. [STOC\u2716] has provided constructions for watermarking arbitrary cryptographic functionalities; the resulting schemes rely on indistinguishability obfuscation (iO) and leave two important open questions: (i) the realization of both unremovability and unforgeability, and (ii) schemes the security of which reduces to simpler hardness assumptions than iO. In this paper we provide a new definitional framework that distinguishes between watermarking cryptographic functionalities and implementations (think of ElGamal encryption being an implementation of the encryption functionality), while at the same time provides a meaningful relaxation of the watermarking model that enables both unremovability and unforgeability under minimal hardness assumptions. In this way we can answer questions regarding the ability to watermark a given implementation of a cryptographic functionality which is more refined compared to the question of whether a watermarked implementation functionality exists. Taking advantage of our new formulation we present the first constructions for watermarking public key encryption that achieve both unremovability and unforgeability under minimal hardness assumptions. Our first construction enables the watermarking of any public-key encryption implementation assuming only the existence of one-way functions for private key detection. Our second construction is at the functionality level and uses a stronger assumption (existence of identity-based encryption (IBE)) but supports public detection of the watermark

Blindly Signed Contracts: Anonymous On-Blockchain and Off-Blockchain Bitcoin Transactions

Although Bitcoin is often perceived to be an anonymous currency, research has shown that a user\u27s Bitcoin transactions can be linked to compromise the user\u27s anonymity. We present solutions to the anonymity problem for both transactions on Bitcoin\u27s blockchain and off the blockchain (in so called micropayment channel networks). We use an untrusted third party to issue anonymous vouchers which users redeem for Bitcoin. Blind signatures and Bitcoin transaction contracts (aka smart contracts) ensure the anonymity and fairness during the bitcoin $\leftrightarrow$ voucher exchange. Our schemes are practical, secure and anonymous