Subject: Re: [bitcoin-dev] [Lightning-dev] Removing the Dust Limit

From: ZmnSCPxj <[email-masked]>
Date: Tue, 10 Aug 2021 11:37:37 +0000

Good morning Billy, et al.,

> For sure, CT can be done with computational soundness. The advantage of unhidden amounts (as with current bitcoin) is that you get unconditional soundness.

My understanding is that it should be possible to have unconditional soundness with the use of El-Gamal commitment scheme, am I wrong?

Alternately, one possible softforkable design would be for Bitcoin to maintain a non-CT block (the current scheme) and a separately-committed CT block (i.e. similar to how SegWit has a "separate" "block"/Merkle tree that includes witnesses).
When transferring funds from the legacy non-CT block, on the legacy block you put it into a "burn" transaction that magically causes the same amount to be created (with a trivial/publicly known salt) in the CT block.
Then to move from the CT block back to legacy non-CT you would match one of those "burn" TXOs and spend it, with a proof that the amount you are removing from the CT block is exactly the same value as the "burn" TXO you are now spending.

(for additional privacy, the values of the "burn" TXOs might be made into some fixed single allowed value, so that transfers passing through the CT portion would have fewer identifying features)

The "burn" TXOs would be some trivial anyone-can-spend, such as `<saltpoint> <0> OP_EQUAL OP_NOT` with `<saltpoint>` being what is used in the CT to cover the value, and knowledge of the scalar behind this point would allow the CT output to be spent (assuming something very much like MimbleWimble is used; otherwise it could be the hash of some P2WSH or similar analogue on the CT side).

Basically, this is "CT as a 'sidechainlike' that every fullnode runs".

In the legacy non-CT block, the total amount of funds that are in all CT outputs is known (it would be the sum total of all the "burn" TXOs) and will have a known upper limit, that cannot be higher than the supply limit of the legacy non-CT block, i.e. 21 million BTC.
At the same time, *individual* CT-block TXOs cannot have their values known; what is learnable is only how many BTC are in all CT block TXOs, which should be sufficient privacy if there are a large enough number of users of the CT block.

This allows the CT block to use an unconditional privacy and computational soundness scheme, and if somehow the computational soundness is broken then the first one to break it would be able to steal all the CT coins, but not *all* Bitcoin coins, as there would not be enough "burn" TXOs on the legacy non-CT blockchain.

This may be sufficient for practical privacy.

On the other hand, I think the dust limit still makes sense to keep for now, though.

Regards,
ZmnSCPxj