Re: [bitcoin-dev] Safer NOINPUT with output tagging

From: Johnson Lau <jl2012@xbt•hk>
To: Ruben Somsen <rsomsen@gmail•com>
Cc: bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] Safer NOINPUT with output tagging
Date: Tue, 18 Dec 2018 04:08:55 +0800	[thread overview]
Message-ID: <B4234D7B-B1AA-41C3-B60B-F1E89E90A47D@xbt.hk> (raw)
In-Reply-To: <CAPv7TjYRVUGWCyFweootbMCJEkyFG4YOJ+M_N_N4j_t043bUfw@mail.gmail.com>

> On 17 Dec 2018, at 11:48 PM, Ruben Somsen <rsomsen@gmail•com> wrote:
> 
> Hi Johnson,
> 
> The design considerations here seem similar to the ML discussion of
> whether Graftroot should be optional [1].

Yes, but the “tagging” emphasises more on the payer’s side: if the payer cannot guarantee that the payee would never reuse the key, the payer could avoid any NOINPUT-related trouble by tagging properly.

> 
>> While this seems fully compatible with eltoo, is there any other proposals require NOINPUT, and is adversely affected by either way of tagging?
> 
> As far as I can tell it should be compatible with Statechains [2],
> since it pretty much mirrors Eltoo in setup.
> 
> My understanding is somewhat lacking, so perhaps I am missing the
> mark, but it is not completely clear to me how this affects
> fungibility if taproot gets added and the setup and trigger tx for
> Eltoo get combined into a single transaction. Would the NOINPUT
> spending condition be hidden inside the taproot commitment?

For the design considerations I mentioned above, the tags must be explicit and configurable by the payer. So it couldn’t be hidden in taproot.

If you don’t care about fungibility, you can always tag your setup output, and makes it ready for NOINPUT spending. Every update will need 2 signatures: a NOINPUT to spend the setup output or an earlier update output, and a NOINPUT to settle the latest update output.

If you care about fungibility, you can’t tag your setup output. Every update will need 3 signatures: a SINGLEINPUT (aka ANYONECANPAY) to spend the setup output, a NOINPUT to spend an earlier update output, and a NOINPUT to settle the latest update output.

(Actually, as soon as you made the first update tx with SINGLEINPUT, you don’t strictly need to make any SINGLEINPUT signatures in the later updates again, as the first update tx (or any update with a SINGLEINPUT signature) could be effectively the trigger tx. While it makes the settlement more expensive, it also means accidentally missing a SINGLEINPUT signature will not lead to any fund loss. So security-wise it’s same as the always-tagging scenario.)

The most interesting observation is: you never have the need to use NOINPUT on an already confirmed UTXO, since nothing about a confirmed UTXO is mutable. And every smart contract must anchor to a confirmed UTXO, or the whole contract is double-spendable. So the ability to NOINPUT-spend a setup output should not be strictly needed. In some (but not all) case it might make the protocol simpler, though.

So the philosophy behind output tagging is “avoid NOINPUT at all cost, until it is truly unavoidable"

> 
> Cheers,
> Ruben Somsen
> 
> [1] https://lists.linuxfoundation.org/pipermail/bitcoin-dev/2018-May/016006.html
> [2]  https://www.reddit.com/r/Bitcoin/comments/9nhjea/eli51525faq_for_statechains_offchain_transfer_of/
> 
> On Mon, Dec 17, 2018 at 8:20 PM Johnson Lau via bitcoin-dev
> <bitcoin-dev@lists•linuxfoundation.org> wrote:
>> 
>> NOINPUT is very powerful, but the tradeoff is the risks of signature replay. While the key holders are expected not to reuse key pair, little could be done to stop payers to reuse an address. Unfortunately, key-pair reuse has been a social and technical norm since the creation of Bitcoin (the first tx made in block 170 reused the previous public key). I don’t see any hope to change this norm any time soon, if possible at all.
>> 
>> As the people who are designing the layer-1 protocol, we could always blame the payer and/or payee for their stupidity, just like those people laughed at victims of Ethereum dumb contracts (DAO, Parity multisig, etc). The existing bitcoin script language is so restrictive. It disallows many useful smart contracts, but at the same time prevented many dumb contracts. After all, “smart” and “dumb” are non-technical judgement. The DAO contract has always been faithfully executed. It’s dumb only for those invested in the project. For me, it was just a comedy show.
>> 
>> So NOINPUT brings us more smart contract capacity, and at the same time we are one step closer to dumb contracts. The target is to find a design that exactly enables the smart contracts we want, while minimising the risks of misuse.
>> 
>> The risk I am trying to mitigate is a payer mistakenly pay to a previous address with the exactly same amount, and the previous UTXO has been spent using NOINPUT. Accidental double payment is not uncommon. Even if the payee was honest and willing to refund, the money might have been spent with a replayed NOINPUT signature. Once people lost a significant amount of money this way, payers (mostly exchanges) may refuse to send money to anything other than P2PKH, native-P2WPKH and native-P2WSH (as the only 3 types without possibility of NOINPUT)
>> 
>> The proposed solution is that an output must be “tagged” for it to be spendable with NOINPUT, and the “tag” must be made explicitly by the payer. There are 2 possible ways to do the tagging:
>> 
>> 1. A certain bit in the tx version must be set
>> 2. A certain bit in the scriptPubKey must be set
>> 
>> I will analyse the pros and cons later.
>> 
>> Using eltoo as example. The setup utxo is a simple 2-of-2 multisig, and should not be tagged. This makes it indistinguishable from normal 1-of-1 utxo. The trigger tx, which spends the setup utxo, should be tagged, so the update txs could spend the trigger utxo with NOINPUT. Similarly, all update txs should be tagged, so they could be spent by other update txs and settlement tx with NOINPUT. As the final destination, there is no need to tag in the settlement tx.
>> 
>> In payer’s perspective, tagging means “I believe this address is for one-time-use only” Since we can’t control how other people manage their addresses, we should never do tagging when paying to other people.
>> 
>> I mentioned 2 ways of tagging, and they have pros and cons. First of all, tagging in either way should not complicate the eltoo protocol in anyway, nor bring extra block space overhead.
>> 
>> A clear advantage of tagging with scriptPubKey is we could tag on a per-output basis. However, scriptPubKey tagging is only possible with native-segwit, not P2SH. That means we have to disallow NOINPUT in P2SH-segwit (Otherwise, *all* P2SH addresses would become “risky” for payers) This should be ok for eltoo, since it has no reason to use P2SH-segwit in intermediate txs, which is more expensive.
>> 
>> Another problem with scriptPubKey tagging is all the existing bech32 implementations will not understand the special tag, and will pay to a tagged address as usual. An upgrade would be needed for them to refuse sending to tagged addresses by default.
>> 
>> On the other hand, tagging with tx version will also protect P2SH-segwit, and all existing wallets are protected by default. However, it is somewhat a layer violation and you could only tag all or none output in the same tx. Also, as Bitcoin Core has just removed the tx version from the UTXO database, adding it back could be a little bit annoying, but doable.
>> 
>> There is an extension to the version tagging, which could make NOINPUT even safer. In addition to tagging requirement, NOINPUT will also sign the version of the previous tx. If the wallet always uses a randomised tx version, it makes accidental replay very unlikely. However, that will burn a few more bits in the tx version field.
>> 
>> While this seems fully compatible with eltoo, is there any other proposals require NOINPUT, and is adversely affected by either way of tagging?
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