Subject: [Bitcoin-development] Proposal for a new opcode

From: Watson Ladd <[email-masked]>
Date: Wed, 21 Mar 2012 18:02:46 -0400

On Wed, Mar 21, 2012 at 3:54 PM, Gregory Maxwell <[email-masked]> wrote:
> On Fri, Mar 2, 2012 at 2:57 PM, Watson Ladd <[email-masked]> wrote:
>> Dear all,
>> I am proposing a new opcode for the purposes of anonymous
>> transactions. This new opcode enables scripts to be given proof that
>> the receiver can carry out or has carried out a previous transaction.
>> I'm currently working on a paper that discusses using this opcode for
>> anonymous transactions.
>
>
> Here is an alternative protocol:
>
>
> N parties wish to purchase equal amounts of Bitcoin without the
> exchange being able to link their future transactions, they each put
> the relevant amount of gold/whatever up at the exchange.
>
> The exchange provides the exchanges public key, and the user provides
> a public key for signing.   Externally the N participants agree on a
> collection of non-cooperating mixers (the mixers may actually just be
> the participants themselves, independent third parties, etc).   Each
> participant generates a new bitcoin address, and encrypts it with the
> the public keys of the the exchange and all the mixers using an
> appropriate communicative homorophic scheme (or just a layers stack of
> regular encryption keys).  The participants then combine their
> encrypted addresess into a block and hand it off to the mixing chain.
> Each mixer randomizes the order and decrypts all the messages with its
> key.
>
> At the end of the chain the exchange does the final decryption and
> presents a list of addresses to the involved users.  Users validate
> that their address is in the set and sign the entire set.  Once all
> involved users have signed, the exchange pays.
>
>
> This requires no changes to the Bitcoin system and could be trivially
> implemented by anyone interested.  It provides anonymity which is
> strong so long as any one of the mixers is uncompromised.  It has very
> low overhead.   It is not directly resistant to disruption, but if
> participation in an identified round requires a key provided by the
> exchange, abusive users can be detected and excluded.
>
> Have I explained this clearly enough? I could probably implement the
> whole system it if its unclear.
>
> Can you contrast this with your proposal for me?
Contrasts
-My protocol works, your's doesn't. It's not enough to have a mix, the
mix needs to be verifiable to avoid
one of the mixers inserting their own key and removing a key that
should be in there. That doesn't mean you can't make your protocol
work with some more magic, but magic is required.
-You need a lot of online computation: the recipients need to be
involved with validating the mix. By contrast in mine you need to wait for
enough people to get their bitcoins to avoid partitioning. But this
might be a strength,
not a weakness.
-You avoid the problem of de-anonymizing through having the protocol
run incompletely: if the permutation is correctly computed the
transaction goes through.
-You also avoid all the problems with modifications to the bitcoin
clients and miners.

It's definitely a good alternative, once you fix the problem in 1.

On a related note, private keys and signatures have better proofs of
knowledge then hashes. Has this been considered in the P2SH
conversation? There might be ways to use this to make even better
methods for enhancing anonymity.
Sincerely,
Watson Ladd

--
"Those who would give up Essential Liberty to purchase a little
Temporary Safety deserve neither  Liberty nor Safety."
-- Benjamin Franklin

-- 
"Those who would give up Essential Liberty to purchase a little
Temporary Safety deserve neither  Liberty nor Safety."
-- Benjamin Franklin