>> I have just PRed a draft version of two BIPs I recently wrote.
>> https://github.com/bitcoin/bips/pull/362
> 
> I suggest running a spellchecker ;)

Thanks. Will do.


> * why would you not allow encryption on non-pre-approved connections?

The encryption should be optional.
The proposed authentication scheme does take care of the
identity-management and therefor prevent MITM attacks.
Without the identity management, you might not detect sending/receiving
encrypted data from/to a MITM.

> * we just removed (ssl) encryption from the JSON interface, how do you suggest 
> this encryption to be implemented without openSSL?

The proposed encryption schema is based on ECDSA/ECDH (implemented in
libsecp256k1) and AES256CBC (implementation is on the way see
https://github.com/bitcoin/bitcoin/pull/7689).
OpenSSL is not required.

> * What is the reason for using the p2p code to connect a wallet to a node?
> I suggest using one of the other connection methods to connect to the node. 
> This avoids a change in the bitcoin protocol for a very specific usecase.

Most known use-case: SPV.

> * Why do you want to do a per-message encryption (wrapping the original)? 
> Smaller messages that contain predictable content and are able to be matched 
> to the unencrypted versions on the wire send to other nodes will open this 
> scheme up to various old statistical attacks.

It's probably extremely inefficient to create a constant time stream.
Even most SSL/SSH application leak information because of the
communication message characteristics.

The current wrapping message proposal is not very efficient.
I will change it so that the p2p message header will contain the
encryption metadata. This should lead to a tiny overhead.


> 
>> Responding peers must ignore (banning would lead to fingerprinting) the 
> requesting peer after 5 unsuccessfully authentication tries to avoid resource 
> attacks.
> 
> Any implementation of that kind would itself again be open to resource 
> attacks.
> Why 5? Do you want to allow a node to make a typo?

Good point. Maybe one false try should lead to ignoring the peer.

> 
> 
>> To ensure that no message was dropped or blocked, the complete communication 
> must be hashed (sha256). Both peers keep the SHA256 context of the encryption 
> session. The complete <code>enc</code> message (leaving out the hash itself) 
> must be added to the hash-context by both parties. Before sending a 
> <code>enc</code> command, the sha256 context will be copied and finalized.
> 
> You write "the complete communication must be hashed" and every message has a 
> hash of the state until it is at that point.
> I think you need to explain how that works specifically.

This is a relative simple concept and does not require rehashing the
whole communication. You just append the "new data".

Some pseudocode:

SHA256CTX ctx;

// first com
SHA256CTX_Update(ctx, 1stmessage);

// copy context
SHA256CTX ctxnew = ctx;

// finalize the copied context
sha256hash = SHA256CTX_Finalize(ctxnew); //use as checksum hash


//////// next message
SHA256CTX_Update(ctx, 2ndmessage);

// copy context
SHA256CTX ctxnew = ctx;

// finalize the copied context
sha256hash = SHA256CTX_Finalize(ctxnew); //use as checksum hash

... etc.

</jonas>