Author: Tony Churyumoff 2016-08-08 15:30:21
Published on: 2016-08-08T15:30:21+00:00
A proposed design has been suggested to hide the entire inputs and outputs of Bitcoin transactions. This plan goes beyond current methods such as CoinJoin, ring signatures and Confidential Transactions which only obfuscate transaction graphs or hide amounts. The proposal suggests publishing only the hash of inputs and outputs in the blockchain as OP_RETURN, whereas the plaintext of inputs and outputs is sent directly to the payee via a private message. The central idea of the proposed design is to hide the entire inputs and outputs, and publish only the hash of inputs and outputs in the blockchain. To protect against double-spends, the payer also has to publish another hash, which is the hash of the output being spent. Unlike regular bitcoin transactions, every output in a private payment must also include a blinding factor, which is just a random string.Each new owner of the coin will have to store its entire history, and when he spends the coin, he forwards the entire history to the next owner and extends it with his own transaction. Thus, we are now forbidding any coin merges but still allowing coin splits. To avoid ultimate splitting into the dust, we will also require that all private coins be issued in one of a small number of denominations. Only integer number of “banknotes” can be transferred, the input and output amounts must, therefore, be divisible by the denomination.To issue the new private coin, one can burn regular BTC by sending it to one of several unspendable bitcoin addresses, one address per denomination. Burning BTC would entitle one to an equal amount of the new private coin, let’s call it *black bitcoin*, or *BBC*. There are a few limitations that ought to be mentioned: After user A sends a private payment to user B, user A will know what the spend proof is going to be when B decides to spend the coin. Therefore, A will know when the coin was spent by B, but nothing more. Neither the new owner of the coin, nor its future movements will be known to A.
Updated on: 2023-06-11T19:25:25.806014+00:00