Subject: Re: [bitcoindev] BIP Draft: "ChillDKG: Distributed Key Generation for FROST"

From: Jonas Nick <[email-masked]>
Date: Tue, 16 Jul 2024 17:31:47 +0000

Thanks Dave. There are indeed potential privacy implications of the recovery
data because only the secret shares are encrypted. Most importantly, the
recovery data contains in plaintext:

- the long-term "host" public keys of the participants
- the final threshold public key that is the result of the DKG

For example, we could imagine a scenario where a DKG participant puts their
recovery data on a cloud hoster and an adversary is able to obtain it. Then the
adversary could use to contained threshold public key to associate on-chain
transactions with the victim.

However, there's nothing preventing the participants from encrypting the
recovery data before backing it up. We do not specify that encryption in the BIP
because it is an operation local to the participants and does not affect the
communication between them. But now that you mention this, I think we should be
a bit more clear in the BIP (and don't call the recovery data "public"). For
example, it may make sense to use the DKG protocol seed to derive an encryption
key, so you don't have to backup any secret data besides the seed.

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